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Can equity and efficiency complement each other?

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  • Blank, Rebecca M.

Abstract

Economists tend to assume that redistributive transfers increase equity but cause a loss in efficiency, the so-called 'leaky bucket' effect. This paper explores situations where efficiency losses are small or where equity and efficiency might even complement each other. A simple model identifies key parameters that cause leaky buckets and which policy can affect. Three situations are discussed where the equity/efficiency tradeoff may be low: When transfers go to populations with no capacity to change their behavior; when transfers go to programs that limit efficiency losses through behavioral requirements; and when commodities are subsidized that function as long-term investments and create future income gains.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 9 (2002)
Issue (Month): 4 (September)
Pages: 451-468

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Handle: RePEc:eee:labeco:v:9:y:2002:i:4:p:451-468

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  1. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
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  7. Alesina, Alberto F & Di Tella, Rafael & MacCulloch, Robert, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," CEPR Discussion Papers 2877, C.E.P.R. Discussion Papers.
  8. Rebecca M. Blank, 1999. "When Can Public Policy Makers Rely on Private Markets? The Effective Provision of Social Services," NBER Working Papers 7099, National Bureau of Economic Research, Inc.
  9. Janet Currie & Duncan Thomas, 2000. "School Quality and the Longer-Term Effects of Head Start," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 755-774.
  10. Bruce D. Meyer & Dan T. Rosenbaum, 1999. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," NBER Working Papers 7363, National Bureau of Economic Research, Inc.
  11. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low-Income Families," NBER Working Papers 6998, National Bureau of Economic Research, Inc.
  12. Martin Feldstein, 1995. "Tax Avoidance and the Deadweight Loss of the Income Tax," NBER Working Papers 5055, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Alfonso Arpaia & Gilles Mourre, 2009. "Institutions and performance in European labour markets: taking a fresh look at evidence," European Economy - Economic Papers 391, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  2. Pfeifer, Christian, 2004. "Fairness und Kündigungen : eine theoretische und empirische Analyse (Fairness and layoffs * a theoretical and empirical analysis)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(2), pages 127-145.
  3. Nordén, Anna, 2014. "Payment Types and Participation in Payment for Ecosystem Services Programs: Stated Preferences of Landowners," Discussion Papers dp-14-11-efd, Resources For the Future.
  4. Berthold, Norbert & von Berchem, Sascha, 2003. "Die Sozialhilfe zwischen Effizienz und Gerechtigkeit: wie kann der Spagat gelingen?," Wirtschaftswissenschaftliche Beiträge 62, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
  5. Figari, Francesco, 2011. "From housewives to independent earners: can the tax system help Italian women to work?," ISER Working Paper Series 2011-15, Institute for Social and Economic Research.
  6. Jordan D. Matsudaira & Rebecca M. Blank, 2008. "The Impact of Earnings Disregards on the Behavior of Low Income Families," NBER Working Papers 14038, National Bureau of Economic Research, Inc.
  7. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582, October.
  8. Nordén, Anna, 2014. "Payment Types and Participation in Payment for Ecosystem Services Programs: Stated Preferences of Landowners," Working Papers in Economics 591, University of Gothenburg, Department of Economics.
  9. Asplund, Rita, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy.
  10. Sahrbacher, Amanda, 2012. "Impacts of CAP reforms on farm structures and performance disparities: An agent-based approach," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 65, number 65.
  11. repec:iab:iabzaf:v:37:i:2:p:127-145 is not listed on IDEAS

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