From household to individual’s welfare: does the Lorenz criteria still hold? Theory and Evidence from French Data
AbstractConsider an income distribution among households of the same size in which individuals, equally needy from the point of view of an ethical observer, are treated unfairly within the household. In the first part of the paper, we look for necessary and sufficient conditions under which the Generalized Lorenz test is preserved from household to individual level. We find that the concavity of the expenditures devoted to public goods relatively to household income is a necessary condition. This condition also becomes sufficient, if joined with the concavity of the expenditure devoted to private goods of the dominated individual. The results are extended to the case of heterogeneous populations, when more complex Lorenz comparisons are involved. In the second part of the paper, we propose a new method to identify the intra-family sharing rule. The double concavity condition is then non-parametrically tested on French households.
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Bibliographic InfoPaper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 469.
Date of creation: Nov 2005
Date of revision:
Lorenz comparisons; intra-household inequality; concavity;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
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- Eugenio Peluso & Alain Trannoy, 2005. "Do redistributive schemes reduce inequality between individuals?," Working Papers 26, University of Verona, Department of Economics.
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