The Income Lever and the Allocation of Aid
AbstractThe paper develops a concept and a measure of the monetary capacity of a country to reduce its own poverty and shows how these tools can be used to guide budget allocations or the distribution of Aid. We call this concept the income lever and define it as the relation between the welfare of the poor and the welfare of the non-poor in a given society. Making use of tax and distributive theory, the paper shows how to different redistributive criteria correspond different normative criteria of income lever. We then construct various income lever indexes based on these criteria and use such indexes to rank countries according to their own monetary poverty reduction capacity. As shown in the empirical application, this methodology can provide an equitable tool to rank countries or regions when it comes to budget or Aid allocations, whether it is the allocation of social funds within the European Union (North-North transfers) or the allocation of Aid from rich to poor countries (North-South transfers).
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Bibliographic InfoPaper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 286.
Length: 30 pages
Date of creation: Jan 2013
Date of revision:
Aid distribution; poverty reduction; redistribution policies.;
Other versions of this item:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H5 - Public Economics - - National Government Expenditures and Related Policies
- I3 - Health, Education, and Welfare - - Welfare and Poverty
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O2 - Economic Development, Technological Change, and Growth - - Development Planning and Policy
- F3 - International Economics - - International Finance
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