A Normative Approach to Measuring Classical Horizontal Inequity
AbstractThis paper makes a new attack on the old problem of measuring horizontal inequity (HI). A local measure of HI is proposed, and aggregated into a global index. Whilst other approaches have captured the welfare gain which would come from eliminating HI revenue-neutrally, our global index provides a measure of the revenue gain per capita which would come from eliminating HI welfare-neutrally. When expressed as a fraction of mean post-tax income, the measure can be viewed as a negative component in the Blackorby and Donaldson (1984) index of tax progressivity, quantifying the loss of vertical performance arising from differences in the tax treatment of equals. Being money-metric, the measure can also be easily and intuitively interpreted. We propose non- parametric estimation procedures to obviate the important þidentification of equalsþ problem. To our knowledge, this provides the first consistent statistical solution to measuring classical horizontal inequity. The method is applied to the Canadian distributions of gross and net incomes in 1981 and 1990.
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Bibliographic InfoPaper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 9701.
Date of creation: 1997
Date of revision:
Other versions of this item:
- Jean-Yves Duclos & Peter Lambert, . "A Normative Approach to Measuring Classical Horizontal Inequity," Discussion Papers 97/3, Department of Economics, University of York.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- 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:
- NEP-ALL-1998-05-25 (All new papers)
- NEP-MIC-1998-05-25 (Microeconomics)
- NEP-PBE-1998-05-25 (Public Economics)
- NEP-PUB-1998-05-25 (Public Finance)
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.:
- Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-70, March.
- Sami Bibi & Jean-Yves Duclos, 2005.
"Decomposing poverty changes into vertical and horizontal components,"
Bulletin of Economic Research,
Wiley Blackwell, vol. 57(2), pages 205-215, 04.
- Bibi, Sami & Duclos, Jean-Yves, 2003. "Decomposing Poverty Changes into Vertical and Horizontal Components," Cahiers de recherche 0312, CIRPEE.
- Jean-Yves Duclos, 2006.
"Equity and Equality,"
Cahiers de recherche
- Sami Bibi & Jean-Yves Duclos, 2003.
"Equity and Policy Effectiveness with Imperfect Targeting,"
Cahiers de recherche
- Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, vol. 83(1), pages 109-140, May.
- Sami Bibi & Jean-Yves Duclos, 2004. "Equity and Policy Effectiveness with Imperfect Targeting," Working Papers 0423, Economic Research Forum, revised Oct 2004.
- Michael Grimm, 2005.
"Removing the anonymity axiom in assessing pro-poor growth,"
Ibero America Institute for Econ. Research (IAI) Discussion Papers
113, Ibero-America Institute for Economic Research.
- Michael Grimm, 2007. "Removing the anonymity axiom in assessing pro-poor growth," Journal of Economic Inequality, Springer, vol. 5(2), pages 179-197, August.
- Duclos, Jean-Yves, 1998. "Social evaluation functions, economic isolation and the Suits index of progressivity," Journal of Public Economics, Elsevier, vol. 69(1), pages 103-121, July.
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