Decomposition of the Gini Coefficient by Income Sources: An Analysis of Determinant Sources for Colombia (2002-2023)

Abstract

This study analyzed how the different sources of income that constitute total household income have a differentiated effect on various segments of the population. The inequality measured by the Gini, Atkinson, and Theil indices for Colombia reflects the distributive efforts to reduce inequality between 2002 and 2023. To conduct this analysis, the Gini coefficient was decomposed by sources of income using the methodology proposed by Lerman, Yitzhaki, and Shorrocks. The results revealed that despite efforts in redistributive policy, the gap between the richest 10% and the poorest 10% widened. The income structure showed that households diversify their income, with institutional assistance being crucial for the lower deciles, while income from primary activities is most representative in the higher deciles. Additionally, from 2020 onwards, there has been increased dependence on institutional assistance among the lowest deciles. The article concluded that, although there have been improvements in per capita income overall, inequalities persist and have been exacerbated in times of crisis. It emphasized the need for more effective policies to address income disparities concerning the main sources and to promote a more equitable distribution in Colombia