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International Income Comparisons and Social Welfare: Methodology, Analysis, and Implications

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  • Dehejia Vivek H.

    (Carleton University)

  • Voia Marcel C.

    (Carleton University)

Abstract

This paper contributes to ongoing debates on international income comparisons by decomposing the income distribution functions for the United States and Canada over the period 1993 - 2000 using finite mixtures. We also conduct tests for equality, first, second and third order stochastic dominance to determine which, if either, country might exhibit greater social welfare, which in our baseline case we model simply as expected utility. Overall, our results suggest that Canada exhibits higher social welfare than U.S., principally because it exhibits lower income inequality, thereby confirming a conjecture by Joseph Stiglitz which was the motivation for our study.

Suggested Citation

  • Dehejia Vivek H. & Voia Marcel C., 2012. "International Income Comparisons and Social Welfare: Methodology, Analysis, and Implications," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-24, June.
    • Handle: RePEc:bpj:globdv:v:3:y:2012:i:1:n:1
    DOI: 10.1515/1948-1837.1167
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    References listed on IDEAS

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