The chapter has three specific objectives. Using Theil’s second measure of
income inequality, a change in national inequality over a certain period of time
can be decomposed into changes in inequality within the rural sector, in inequality
within the urban sector, in the gap in mean incomes between the two sectors,
and in the population share of the urban sector – a measure of urbanization. The
first objective of this chapter is to estimate how much of the observed changes in
inequality in the four Asian countries over the past two decades can be attributed
to changes in the above four components or drivers.