UNDERSTANDING INCOME INEQUALITY: CONCEPT, CAUSES AND MEASUREMENT

Abstract

This paper contributes to the understanding of the phenomenon of income inequality by first providing a logical delimitation of the subject of analysis in order to reach hermeneutic consistency; second, by reviewing the most important theoretical causes of income inequality as evidence of the enormous intricacy of this phenomenon and its multifacetic nature; third, by describing the most important instruments of income inequality metrics, with emphasis on the different objective measures available in the literature and the way they are calculated. Special importance is given to the Gini coefficient due to its generalized application in empirical studies.