What Lies Between Groups? A Distribution-Sensitive Gini Decomposition

Conventional inequality subgroup decompositions often summarize between-group inequality through differences in group means. This is informative about differences in expected outcomes, but not about differences between the underlying group-specific distributions. The paper introduces a decomposition of the Gini index to address this concern. For each pair of groups, I identify the maximal subdensity shared by their outcome distributions and decompose the cross-group Gini interaction into a common-mass component and a distributional-separation component. The resulting decomposition is non-negative and preserves the conventional within-group contribution. An application to regional income inequality in five European countries shows that distribution-specific mass can account for a quantitatively relevant part of the national Gini coefficient even when conventional between-region components are small. JEL classification: D31; D63; C43; R12.