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Partial Horizontal Inequity Orderings: A non-parametric Approach

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Author Info
Juan Gabriel Rodríguez () (Universidad Rey Juan Carlos-Instituto de Estudios Fiscales)
Rafael Salas () (Universidad Complutense de Madrid.)
Irene Perrote () (Universidad Europea de Madrid)

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Abstract

We provide a partial ordering view of horizontal inequity (henceforth HI), based on the Lorenz criterion, associated with different post-tax income distributions and a (bistochastic) nonparametric estimated benchmark distribution. As a consequence, several measures consistent with the Lorenz criterion can be rationalized. In addition, we establish the so-called horizontal inequity transfer principle, which imposes a normative minimum requirement that any HI measure must satisfy. Our proposed HI ordering is consistent with this principle. Moreover, we adopt a cardinal view to decompose the total effect of a tax system into a welfare gain due to HI-free income redistribution and a welfare loss due to HI, without any additive decomposable restriction on the indices. Hence, more robust tests can be applied. Other decompositions in the literature are seen as particular cases.

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Publisher Info
Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/01.

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Length: 40 pages
Date of creation: 2004
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Handle: RePEc:cea:doctra:e2004_01

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Related research
Keywords: vertical redistribution; horizontal inequity; social welfare; non-parametric estimation.;

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Find related papers by JEL classification:
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

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References listed on IDEAS
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.:
  1. Mervyn A. King, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," NBER Working Papers 0468, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Cowell, Frank A. & Victoria-Feser, Maria-Pia, 1996. "Poverty measurement with contaminated data: A robust approach," European Economic Review, Elsevier, vol. 40(9), pages 1761-1771, December. [Downloadable!] (restricted)
  3. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-88, May. [Downloadable!] (restricted)
  4. King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January. [Downloadable!] (restricted)
  5. Raúl Camarero & Octavio Herrero & Ignacio Zubiri, 1993. "La medición de la inequidad horizontal: teoría y una aplicación al caso de Vizcaya," Investigaciones Economicas, Fundación SEPI, vol. 17(2), pages 333-362, May. [Downloadable!]
  6. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Blackwell Publishing, vol. 44(2), pages 77-124, April.
  7. Jenkins, Stephen P., 1988. "Empirical measurement of horizontal inequity," Journal of Public Economics, Elsevier, vol. 37(3), pages 305-329, December. [Downloadable!] (restricted)
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  8. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, vol. 68(6), pages 1435-1464, November.
    Other versions:
  9. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  10. Peter Lambert & Simon Parker, 1997. "Testing for horizontal inequity econometrically," IFS Working Papers W97/18, Institute for Fiscal Studies.
  11. Stephen Jenkins & Peter Lambert, . "Horizontal Inequity Measurement: A Basic Reassessment," Discussion Papers 96/21, Department of Economics, University of York.
  12. Lambert, P & Ramos, X, 1995. "Vertical redistribution and horizontal inequity," IFS Working Papers W95/01, Institute for Fiscal Studies.
  13. Jean-Yves Duclos & Peter J. Lambert, 2000. "A normative and statistical approach to measuring classical horizontal inequity," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 87-113, February. [Downloadable!] (restricted)
  14. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April. [Downloadable!] (restricted)
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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.)

  1. Paul Allanson & Benedetto Rocchi, 2008. "A comparative analysis of the redistributive effects of agricultural policy in Tuscany and Scotland," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 86(1), pages 35-56. [Downloadable!]
  2. Luis José Imedio Olmedo & Encarnación Macarena Parrado Gallardo & María Dolores Sarrión Gavilán, 2005. "Horizontal equity, equal progression: an utilitarian approach," Hacienda Pública Española, IEF, vol. 174(3), pages 87-115, September. [Downloadable!]
  3. Paul Allanson, 2006. "On the characterisation and measurement of the redistributive effects of agricultural policy," Discussion Papers 188, University of Dundee, Economic Studies. [Downloadable!]
    Other versions:
  4. Allanson, Paul, 2005. "Classical Horizontal Inequities in the Provision of Agricultural Income Support," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24769, European Association of Agricultural Economists. [Downloadable!]
    Other versions:
  5. Juan Gabriel Rodríguez & Rafael Salas, 2004. "A Bistochastic Nonparametric Estimator," Economic Working Papers at Centro de Estudios Andaluces E2004/22, Centro de Estudios Andaluces. [Downloadable!]
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