Income Inequality and Poverty
AbstractThe first part of this paper argues that income inequality is not a problem in need of remedy. The common practice of interpreting a rise in the gini coefficient measure of inequality as a bad thing violates the Pareto principle and is equivalent to using a social welfare function that puts negative weight on increases in the income of high income individuals. The real distributional problem is not inequality but poverty. The paper considers three sources of poverty and asks what if anything might be done about each of them: unemployment; a low level of earning capacity; and individual choice.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6770.
Date of creation: Oct 1998
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Find related papers by JEL classification:
- D3 - Microeconomics - - Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-11-20 (All new papers)
- NEP-MIC-1998-11-20 (Microeconomics)
- NEP-PBE-1998-11-20 (Public Economics)
- NEP-PUB-1998-11-20 (Public Finance)
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