Inequality is at the forefront of the contemporary public and policy debate. If you open up today’s newspaper you are likely to encounter an article on the gender pay gap, on racial or ethnic discrimination or limited access to healthcare or education, or on ‘left behind’ areas. These are just a few dimensions of inequalities.
Before diving into particular measures of income inequality it is important to understand how incomes are constructed. We measure incomes at the household level — that is, we will sum up the total incomes of all individuals living in the same household to obtain a household-level income measure.
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