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This analytical tool illustrates how to decompose inequality measures by subgroups of populations. In particular, it defines the concepts of within and between inequality and analyses how different inequality indexes perform with respect to this decomposition. In particular, the performance of the analysis of variance, the Gini Index and the Theil Index will be discussed. A step-by-step procedure and numerical examples give operational content to the tool.

For further information, see also:

• Charting Income Inequality. The Lorenz Curve. EASYPol Series 000
• Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Lorenz Curves. EASYPol Series 001
• Inequality Analysis: The Gini Index. EASYPol Series 040
• Describing Income Inequality. Theil Index and Entropy Class Indexes. EASYPol Series 051
• Policy Impacts on Inequality: Simple Inequality Measures. EASYPol Series 080

This paper is part of the FAO Policy series: EASYPol-Resources for policy making (in agriculture, rural development and food security). To find other EASYPol series' resources, go to the Policy Support and Governance website>Resources and type "EASYPol" in the free text search.