Social distance between workers: An application to Italian geographic areas

Abstract

This paper is concerned with the measurement of social distance, clustering, or polarization between workers of a given society. This concept is fundamentally different from that of inequality and thus cannot be measured by any Lorenz consistent index. Similarly, it cannot be additively decomposed into within- and between-group components using classical techniques. A new decomposition method is proposed and applied to Italian workers. The method provides an index that can be used both to calculate the distance between social groups classified according to worker characteristics and to track changes across time. The new method also reveals the factors that are reshaping the wage distribution and allows us to identify precisely where these effects are having their greatest impact.