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Are equalization payments making Canadians better off? A two-dimensional dominance answer

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  • Benoît Tarroux

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Abstract

This paper provides a normative appraisal of the Canadian equalization transfers system. For that sake, the two-dimensional dominance criteria introduced by Atkinson and Bourguignon(RES, 1982) are used to compare the distributions of private and public good before and after equalization payments. As the distribution before equalization is not observable, one simulates it on the basis of various scenarios which specify both its financing by the federal government and its utilization by provincial governments. The results show that Canadian equalization payments never improve social welfare for all utilitarian social planners who believe that household convert public and private goods into well-being by a utility function belonging to the classes that corresponds to the Atkinson and Bourguignon criteria. A further parametric restriction on the class of utility functions however enables to get more precise results.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10888-010-9152-1
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Bibliographic Info

Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 10 (2012)
Issue (Month): 1 (March)
Pages: 19-44

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Handle: RePEc:kap:jecinq:v:10:y:2012:i:1:p:19-44

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Web page: http://springerlink.metapress.com/link.asp?id=111137

Related research

Keywords: Equalization transfers; Normative appraisal; Dominance; Multidimensional distribution; Public goods; D31; D63; H4; H77; I38;

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References

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Cited by:
  1. Rongili Biswas & Nicolas Gravel & Rémy Oddou, 2013. "The segregative properties of endogenous formation of jurisdictions with a welfarist central government," Social Choice and Welfare, Springer, vol. 41(2), pages 293-319, July.

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