An anatomy of the distribution of urban income : a tale of two cities in Colombia

This approach for analysis of distributional and other change in incomes in fast growing cities in the developing world is based on data from Bogota and Cali. Among the distinguishing features is the utilization of primary data from different household surveys, of comparable quality spread over six years. The paper uses different samples, inequality indices, income concepts, and ranking procedures in its analysis. Particular attention is paid to the existence of spatial inequality among different parts of the two cities by using an index of spatial income segregation. This is found to be very high when the cities are disaggregated spatially into radical sectors rather than into concentric rings. The inequality in labor earnings is also calculated and decomposed. The paper finds that the industry of activity and the size of the firm of the worker contribute little to overall inequality in earnings. Instead, education, occupation, and residence location of the worker contributed most to inequality in earnings. The results suggest that increases in spatial inequality in household as well as labor earnings could have deleterious effects on income distribution in the future. A special computer program EQUALISE which can compute income distribution indices is included.