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Horizontal and vertical inequality in a social welfare framework

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  • Rafael Salas del Marmol

    (Instituto Complutense de Análisis Económico. Universidad Complutense de Madrid.)

Abstract

In this paper a new definition of horizontal inequality is adopted. It is defined in terms of the distributional change within intervals of similar households, produced by the Tax System. We believe that this definition is better suited for measurement of the comparative injustice that may be caused by the Tax System among similar households. In particular a within-group Atkinson inequality index applied to one minus the tax rates of similar households is proposed. It enables us to introduce this concept in a general social welfare framework together with efficiency and vertical equity redistribution considerations, where the horizontal equity and vertical redistribution are income-invariant measures. It contributes to a more appropriate evaluation of the desirability of tax reforms aimed at achieving greater horizontal equity.

Suggested Citation

  • Rafael Salas del Marmol, 1994. "Horizontal and vertical inequality in a social welfare framework," Documentos de Trabajo del ICAE 9415, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:9415
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    References listed on IDEAS

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    1. Frank A. Cowell, 1985. "Measures of Distributional Change: An Axiomatic Approach," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(1), pages 135-151.
    2. Cowell, Frank A., 1980. "Generalized entropy and the measurement of distributional change," European Economic Review, Elsevier, vol. 13(1), pages 147-159, January.
    3. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
    4. 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.
    5. 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.
    6. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-288, May.
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    Bienestar social; Sistema tributario.;

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