Income Inequality and its decomposition to provinces

Income inequality and income distribution across the population of an economy are unquestionably of crucial importance to a full understanding of the impact of politically and secularly induced economic change. In this paper we review the income inequality indices with emphasize on Gini and Generalized Entropy measures(GE). The axiom of Additive decomposability is discussed and the decomposed form of GE is presented. Moreover a method for estimation of these indices regarding the Equivalence scale is reviewed and we use this method in computation and decomposition of income inequality in Iranian rural families in 2008.We obtain that the four provinces with the high inequality are respectively. Also we see that 89.8 percent of total inequality is due to between provinces and 10.2 percent of it is due to within provinces. So the factor of province is quite effective to income inequality.