Inequality and deprivation within and between groups: An illustration of European union countries

This paper broadens the approach of Hey and Lambert (Q. J. Econ. 95,567–573 1980) regarding relative deprivation to the case in which individuals compare themselves with individuals belonging not only to their own group, but also to other groups. In this way, we obtain the average deprivation of a population in relation to another. This allows us to establish a correspondence between the decomposition of the Gini coefficient based on a partition of the population, and the decomposition of deprivation into two components. One quantifies deprivation within the subpopulation and the other deprivation between populations. An empirical illustration is given, based on the European Community Household Panel (ECHP). The authors acknowledge the financial support of the Spanish Government–MCYT, (SEC2001-1668) and would like to thank Jacques Silber and two anonymous referees for their suggestions.