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Classical Horizontal Inequity and Reranking: an Integrated Approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Jean-Yves Duclos ()
Vincent Jalbert
Abdelkrim Araar
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The last 20 years have seen a significant evolution in the literature on horizontal inequity (HI) and have generated two major and "rival" methodological strands, namely, classical HI and reranking. We propose in this paper a class of ethically flexible tools that integrate these two strands. This is achieved using a measure of inequality that merges the well-known Gini coefficient and Atkinson indices, and that allows a decomposition of the total redistributive effect of taxes and transfers in a vertical equity effect and a loss of redistribution due to either classical HI or reranking. An inequality-change approach and a money-metric cost-of-inequality approach are developed. The latter approach makes aggregate classical HI decomposable across groups. As in recent work, equals are identified through a nonparametric estimation of the joint density of gross and net incomes. An illustration using Canadian data from 1981 to 1994 shows a substantial, and increasing, robust erosion of redistribution attributable both to classical HI and to reranking, but does not reveal which of reranking or classical HI is more important since this requires a judgement that is fundamentally normative in nature.
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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number
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Date of creation: 24 Jan 2001Date of revision:
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Keywords: Horizontal inequity ; reranking ; tax equity ; inequality ; Canadian tax system. ; Other versions of this item:
Paper Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2000.
"Classical Horizontal Inequity and Reranking: an Integrated Approach ,"
Cahiers de recherche
0002, Université Laval - Département d'économique.
[Downloadable!] Duclos, J.Y. & Jalbert, V. & Araar, A., 2000.
"Classical Horizontal Inequity and Reranking: an Integrated Approach ,"
Papers
0002, Laval - Recherche en Politique Economique.
Find related papers by JEL classification: C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports :
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Wagstaff, Adam, 2005.
"Decomposing changes in income inequality into vertical and horizontal redistribution and reranking, with applications to China and Vietnam ,"
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"An Atkinson-Gini family of social evaluation functions ,"
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