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Show APPENDIXB METHODOLOGY OF INCOME INEQUALITY DECOMPOSITIONS BI. Defining the Two Theil Indices The first Theil's entropy index T is based defined on the notion of information theory. It is as where nJ.1 Lorenz I = L =lYi curve = at the Y is total income. Note that percentile corresponding from the Lorenz computed directly curve (Yi / J.1) is simply to income level the slope Yi' Hence T of the can be of the income distribution. The motivation for T, however, derives from the "entropy" H(y) associated with the income shares (YI / Y), ... , (Yn / Y) : SIThe following sections are directly taken from Anand 1983, Cadwell 1995 and Litchfield 1999. |
