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Inequality measurement and the leaky-bucket paradox

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  • Christian Seidl

    (Institut für Volkswirtschaftslehre der Universität Kiel)

Abstract

The transfer principle requires inequality measures to decrease for mean preserving contractions. How much leakage of transfers can preserve inequality? Conditions are shown for leaky transfers to preserve inequality. We find that positive remainders with positive or negative leakage as well as negative remainders with positive leakage may occur. This constitutes the leaky-bucket paradox.

Suggested Citation

  • Christian Seidl, 2001. "Inequality measurement and the leaky-bucket paradox," Economics Bulletin, AccessEcon, vol. 4(6), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-01d30001
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    References listed on IDEAS

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    1. Creedy, J. & Hurn, S., 1998. "Distributional Preferences and the Extended Gini Measures of Inequality," Department of Economics - Working Papers Series 619, The University of Melbourne.
    2. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931, Decembrie.
    3. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
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    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Cited by:

    1. Eva Camacho-Cuena & Tibor Neugebauer & Christian Seidl, 2007. "Leaky Buckets Versus Compensating Justice: An Experimental Investigation," Working Papers 74, ECINEQ, Society for the Study of Economic Inequality.
    2. Bosmans, Kristof, 2014. "Distribution-sensitivity of rank-dependent poverty measures," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 69-76.
    3. Peter Lambert, & Giuseppe Lanza, 2003. "The effect on inequality of changing one or two incomes," IFS Working Papers W03/15, Institute for Fiscal Studies.
    4. Schlör, Holger & Fischer, Wolfgang & Hake, Jürgen-Friedrich, 2013. "Sustainable development, justice and the Atkinson index: Measuring the distributional effects of the German energy transition," Applied Energy, Elsevier, vol. 112(C), pages 1493-1499.
    5. de la Vega, Casilda Lasso & Seidl, Christian, 2007. "The Impossibility of a Just Pigouvian," Economics Working Papers 2007-10, Christian-Albrechts-University of Kiel, Department of Economics.
    6. Camacho Cuena, Eva & Neugebauer, Tibor & Seidl, Christian, 2004. "Leaky bucket Paradoxes in income inequality perceptions: an experimental investigation," Economics Working Papers 2004-04, Christian-Albrechts-University of Kiel, Department of Economics.
    7. Peter Lambert & Giuseppe Lanza, 2006. "The effect on inequality of changing one or two incomes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 253-277, December.
    8. Schlör, Holger & Fischer, Wolfgang & Hake, Jürgen-Friedrich, 2012. "Measuring social welfare, energy and inequality in Germany," Applied Energy, Elsevier, vol. 97(C), pages 135-142.
    9. Camacho Cuena, Eva & Neugebauer, Tibor & Seidl, Christian, 2005. "Compensating justice beats leaky buckets: an experimental investigation," Economics Working Papers 2005-06, Christian-Albrechts-University of Kiel, Department of Economics.

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