Inequality in Italy: an approach based on Shapley value decomposition

The aim of this paper is to analyse inequality in Italy between 1997 and 2004. We decompose the Gini index of inequality using the Shapley value decomposition (Shapley, 1953; Shorrocks, 1982) in order to rank the contribution of different socio - economic variables to income inequality among individuals and time. Shapley's value decomposition is a regression based technique that allows to consider different explanatory factors, both economics and demographics. We used data from the Italian Household Budget Survey (ISTAT) in the period 1997 - 2004, previously treated in order to group individuals in cohorts with the aim to understand the dynamic of different factors contribution to inequality, using a Pseudo - Panel approach.