Are equalization payments making Canadians better off? A two-dimensional dominance answer
AbstractThis 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.
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Bibliographic InfoArticle provided by Springer in its journal The Journal of Economic Inequality.
Volume (Year): 10 (2012)
Issue (Month): 1 (March)
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Web page: http://springerlink.metapress.com/link.asp?id=111137
Equalization transfers; Normative appraisal; Dominance; Multidimensional distribution; Public goods; D31; D63; H4; H77; I38;
Other versions of this item:
- Benoit Tarroux, 2006. "Are Equalization Payments Making Canadians Better Off? A Two-Dimensional Dominance Answer," IDEP Working Papers 0608, Institut d'economie publique (IDEP), Marseille, France, revised 15 Nov 2006.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H4 - Public Economics - - Publicly Provided Goods
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
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