The Theil Index in Sequences of Nested and Hierarchic Grouping Structures: Implications for the Measurement of Inequality through Time, with Data Aggregated at Different Levels of Industrial Classification

This paper deepens and extends the conclusion by Conceição and Galbraith [2000] that, under some very general conditions, the dynamics of overall inequality can be captured using only the between sector component of the Theil index. This paper explores the fractal properties of the Theil index, and presents a more compelling empirical illustration. The fractal property of the Theil index results directly from its characteristic of perfect decomposability, which allows for the separation of inequality into between- and a within-groups components, provided that the groups are mutually exclusive and completely