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Interactions Inequality-Polarization: Characterization Results(*)

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  • Juan Prieto-Rodríguez

    (Universidad de Oviedo and Instituto de Estudios Fiscales (Spain))

  • Juan Gabriel Rodríguez

    (Universidad Rey Juan Carlos de Madrid and Instituto de Estudios Fiscales (Spain))

  • Rafael Salas

    () (Universidad Complutense de Madrid and Instituto de Estudios Fiscales (Spain))

Abstract

. Recent literature stresses the multidimensional nature of income distribution. Two of the most relevant components are inequality and polarization. In this paper, we show the restrictions of keeping simultaneously constant these two aspects whenever the distribution of incomes changes. Distributional change could originate from any economic policy or simply from economic growth. Hence, our result implies an effective restriction for policymakers that they cannot avoid and should not ignore. Our proof embodies a general view of polarization that includes the Wolfson and the Esteban and Ray approaches. The paper also develops other links for the case of controlling only one variable and deducing the implications for the other variable.

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File URL: http://www.ief.es/documentos/recursos/publicaciones/papeles_trabajo/2005_15.pdf
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Bibliographic Info

Paper provided by Instituto de Estudios Fiscales in its series Working Papers with number 15-05 Classification-JEL : D30, D63, H20..

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Handle: RePEc:hpe:wpaper:y:2005:i:15

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Related research

Keywords: polarization; inequality; economic policy.;

References

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  1. Esteban, J. & Gradin, C. & Ray, D., 1999. "Extension of a Measure of Polarization, with an Application to the Income Distribution of Five OECD Countries," Papers 24, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
  2. Wang, You-Qiang & Tsui, Kai-Yuen, 2000. " Polarization Orderings and New Classes of Polarization Indices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 349-63.
  3. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2003. "Polarization: Concepts, Measurement, Estimation," Working Papers 46, Barcelona Graduate School of Economics.
  4. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  5. José María Arranz, . "La Seguridad Del Empleo En España: Evidencia Con Datos De La Epa (1987-2003)," Working Papers 5-04 Classification-JEL :, Instituto de Estudios Fiscales.
  6. Esteban, J. & Ray, D., 1993. "On the Measurement of Polarization," UFAE and IAE Working Papers 221.93, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  7. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  8. Gradin, Carlos, 2000. "Polarization by Sub-populations in Spain, 1973-91," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(4), pages 457-74, December.
  9. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-28, October.
  10. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-58, May.
  11. Wolfson, Michael, 1997. "Divergent Inequalities - Theory and Empirical Results (Revised Edition)," Analytical Studies Branch Research Paper Series 1997066e, Statistics Canada, Analytical Studies Branch.
  12. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
  13. Juan G. Rodríguez & Rafael Salas, . "Extended Bi-Polarization And Inequality Measures," Working Papers 10-03 Classification-JEL , Instituto de Estudios Fiscales.
  14. X. Zhang & R. Kanbur, 2001. "What Difference Do Polarisation Measures Make? An Application to China," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(3), pages 85-98.
  15. Juan Prieto Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, . "Is An Inequality-Neutral Flat Tax Reform Really Neutral?," Working Papers 29-04 Classification-JEL , Instituto de Estudios Fiscales.
  16. Miguel-Angel López García, 2005. "La vivienda y la reforma fiscal de 1998: un ejercicio de simulación," Hacienda Pública Española, IEF, vol. 175(4), pages 123-147, december.
  17. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-21, December.
  18. Chakravarty, Satya R & Majumder, Amita, 2001. "Inequality, Polarisation and Welfare: Theory and Applications," Australian Economic Papers, Wiley Blackwell, vol. 40(1), pages 1-13, March.
  19. Davies, J. B. & Shorrocks, A. F., 1989. "Optimal grouping of income and wealth data," Journal of Econometrics, Elsevier, vol. 42(1), pages 97-108, September.
  20. José María Arranz & Carlos García-Serrano, . "¿Qué Ha Sucedido Con La Estabilidad Del Empleo En España?. Un Análisis Desagregado Con Datos De La Epa: 1987-2003(*)," Working Papers 4-04 Classification-JEL :, Instituto de Estudios Fiscales.
  21. Fidel Picos Sánchez, . "Modelo Dual De Irpf Y Equidad: Un Nuevo Enfoque Teórico Y Su Aplicación Al Caso Español," Working Papers 8-04 Classification-JEL :, Instituto de Estudios Fiscales.
  22. Davies, James B. & Hoy, Michael, 2002. "Flat rate taxes and inequality measurement," Journal of Public Economics, Elsevier, vol. 84(1), pages 33-46, April.
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Cited by:
  1. Juan Gabriel Rodríguez, 2004. "Measuring polarization, inequality, welfare and poverty," Economic Working Papers at Centro de Estudios Andaluces E2004/75, Centro de Estudios Andaluces.

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