measure inequality. This choice is guided by the interest on horizontal inequality across the different care and fiscal groups, rather than vertical inequality across the entire population of households, as is the case in a traditional fiscal incidence study. Thus, we look to break down an aggregate inequality index into two components: within-household and between-household inequality, allowing to focus separately on the extent of inequality occurring between fiscal and care groups.

The Theil index (GE(1)),<sup>10</sup> is a summary measure of the difference between the shares of the income and the shares of population of each group, in this case, each type of household. It reflects the extent to which the distribution of income between groups differs from the distribution of the population in those groups. When all the groups have a share of income equal to their population share, the distribution is completely equal (the overall Theil index is zero). Unlike the Gini index, the Theil is sub-group decomposable,<sup>11</sup> which is why we prefer it over the Gini coefficient, although we still present the latter for comparability with Rodriguez and Wai-Poi (2021).<sup>12</sup> _Figure 1. Definition of CEQ Income Concepts and Fiscal Interventions in Jordan_ <!-- Start of picture text --> Contributory social<br>insurance old-age pensions<br>(net of contributions)<br>Direct cash transfers: NAF;<br>bread compensation<br>scheme, Zakat, non-<br>contributory pensions,<br><!-- End of picture text --> <!-- Start of picture text --> Indirect subsidies (direct<br>and indirect impacts):<br>electricity; water<br>In-kind transfers net of<br>user fees: health;<br><!-- End of picture text --> <!-- Start of picture text --> MARKET INCOME<br>(PGT scenario)<br><!-- End of picture text --> <!-- Start of picture text --> MARKET INCOME PLUS<br>PENSIONS<br>(PRE-FISCAL INCOME)<br><!-- End of picture text --> <!-- Start of picture text --> NET<br>MARKET<br>INCOME<br><!-- End of picture text --> <!-- Start of picture text --> DISPOSABLE<br>INCOME<br><!-- End of picture text --> <!-- Start of picture text --> CONSUMABLE<br>INCOME<br><!-- End of picture text --> <!-- Start of picture text --> FINAL<br>INCOME<br><!-- End of picture text --> <!-- Start of picture text --> Direct taxes: PIT, property<br>tax, border tax<br><!-- End of picture text --> <!-- Start of picture text --> Indirect taxes: GST; SST<br>(tobacco, alcohol, sodas,<br><!-- End of picture text --> Source: Adapted from Lustig (2018).

10 The Theil belongs to the Generalized Entropy (GE) measures, which depend on a parameter (α) that determines the sensitivity of the measure to different parts of the distribution. The lower the parameter, the higher the weight given to the lower tail of the distribution, giving more relevance to those who are more deprived. The most common values are 0 (mean log deviation), 1 (Theil) and 2 (coefficient of variation).

11 The Gini decomposition has a non-zero residual term and is not sub-group consistent. The Gini decomposition has a non-zero residual term and is not sub-group consistent.

11 The Gini decomposition has a non-zero residual term and is not sub-group consistent. The Gini decomposition has a non-zero residual term and is not sub-group consistent. 12 Unlike the Gini, which ranges from 0 to 1, the Theil measure’s upper bound depends on the sample size of the distribution. The bound is ln( ), where is the sample size nn nn