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Inequality Within And Among Nations

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  • Michael C. Lovell

    ()
    (Wesleyan University)

Abstract

This paper looks at both within country and among country inequality. In the spirit of Dalton[1920] and Atkinson[1970] this paper reports estimates of the welfare loss arising from inequality. The paper also explores the implications of Duesenberry style interdependent utility functions when a Utilitariansocial welfare function is employed and evaluates the appropriateness of the Gini coefficient and the coefficient of variation as possible measures of “depression” or “relative deprivation.” The paper reports a variety of measures of inequality for the 82 countries for which comparable data are available from the 1996 World Development Report. In 18% of the pair-wise comparisons of inequality in different countries the situation is ambiguous in the sense that neither country Lorenz dominates the other. Shorrocks[1982] Generalized Lorenz curves leave ambiguous 16% of paired welfare comparisons. By a wide variety of alternative measures, inequality among nations is much greater than inequality within countries. The data generated a surprising empirical result: for any utility function satisfying Dalton’s Principle of Transfers, the loss of welfare arising from within country inequality is approximately 40% of the loss caused by inequality among nations.

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Bibliographic Info

Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 1998-001.

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Length: 25 pages
Date of creation: Jul 1998
Date of revision:
Publication status: Published in Journal of Income Distribution,(1), 1998
Handle: RePEc:wes:weswpa:1998-001

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Related research

Keywords: Inequality; Income Distribution; Gini Coefficient; Relative Deprivation; Lorenz Dominance; Generalized Lorenz Curve; Veil of Ignorance; Equally Distributed Equivalent Income; Interdependent utilities; Tax price of public goods;

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References

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  1. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
  2. Gastwirth, Joseph L, 1972. "The Estimation of the Lorenz Curve and Gini Index," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 306-16, August.
  3. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1990. "Popular Attitudes Towards Free Markets: The Soviet Union and the United States Compared," Cowles Foundation Discussion Papers 952, Cowles Foundation for Research in Economics, Yale University.
  4. Summers, Robert & Kravis, Irving B. & Heston, Alan, 1984. "Changes in the world income distribution," Journal of Policy Modeling, Elsevier, vol. 6(2), pages 237-269, May.
  5. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931, October.
  6. Hey, John D & Lambert, Peter J, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 567-73, November.
  7. Kenneth Greene, 1982. "The median voter and his elasticity of substitution," Public Choice, Springer, vol. 39(2), pages 283-289, January.
  8. Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 321-24, May.
  9. Lovell, Michael C, 1978. "Spending for Education: The Exercise of Public Choice," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 487-95, November.
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Cited by:
  1. Gertrudes Saúde Guerreiro, 2012. "Regional Income Distribution in Portugal," CEFAGE-UE Working Papers 2012_06, University of Evora, CEFAGE-UE (Portugal).

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