Theil-T index by income stratum and by determining the income inequality: an application to the labor market in Santa Maria city in Rio Grande do Sul

Abstract

The main purpose of this is paper is to presents the Theil-T index based on the laws of physics and Shannon´s modern mathematical theory of communication to measure income inequality. This index enables to use stratum data by income besides to estimating the inequality intra stratum. The methodology will be  illustrated with an  application to measure the inequality   in the formal labor market in  Santa Maria city in  Rio Grande do Sul, using  social characteristics  as gender, age and education level  and,  attributes of the own market like  sphere of activity and economic activity  from 2000 to 2009. Although the ex-inequality index calculated using the characteristics above mentioned is classified as medium low according to the PNUD classification, the index  emphasizes the importance of assessing the distribution of income considering the local conditions of each micro region  in order to direct the public politics  to correct the most influential determinants of disparities.