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Equivalizing Incomes: A Normative Approach

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  • Udo Ebert

Abstract

The paper deals with the comparisonof living standards and investigates two normative methods ofderiving equivalizing transformations for a population whichhas different household types. The first one equates the utilitylevels of representative household members belonging to differenthouseholds. The second method evaluates the well-being of householdsby a social welfare ordering defined by means of household utilityfunctions. The methods can determine the implicit normative assumptionsinvolved in conducting distributional analysis using any equivalizingtransformation. In particular income-level dependent equivalencescales can be founded in this framework. The assumptions underlyingboth approaches are examined and compared. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 619-640, December.
  • Handle: RePEc:kap:itaxpf:v:7:y:2000:i:6:p:619-640
    DOI: 10.1023/A:1008777025610
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    References listed on IDEAS

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    1. Kevin W. S. Roberts, 1980. "Interpersonal Comparability and Social Choice Theory," Review of Economic Studies, Oxford University Press, vol. 47(2), pages 421-439.
    2. Bossert, Walter & Pfingsten, Andreas, 1990. "Intermediate inequality: concepts, indices, and welfare implications," Mathematical Social Sciences, Elsevier, vol. 19(2), pages 117-134, April.
    3. Ebert, Udo, 2000. "Sequential Generalized Lorenz Dominance and Transfer Principles," Bulletin of Economic Research, Wiley Blackwell, vol. 52(2), pages 113-122, April.
    4. Lambert, Peter J. & Yitzhaki, Shlomo, 1997. "Income tax credits and exemptions," European Journal of Political Economy, Elsevier, vol. 13(2), pages 343-351, May.
    5. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, vol. 44(2), pages 77-124, April.
    6. Diewert, Erwin, 2007. "Index Numbers," Economics working papers diewert-07-01-03-08-17-23, Vancouver School of Economics, revised 31 Jan 2007.
    7. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, vol. 64(254), pages 233-244, May.
    8. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, vol. 42(1), pages 67-80, September.
    9. Kaplow, Louis, 1996. " Optimal Distribution and the Family," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(1), pages 75-92, March.
    10. Ebert U., 1996. "Income inequality and differences in household size," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 57-58, February.
    11. Ebert, Udo & Moyes, Patrick, 2000. "Consistent Income Tax Structures When Households Are Heterogeneous," Journal of Economic Theory, Elsevier, vol. 90(1), pages 116-150, January.
    12. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    13. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
    14. Udo Ebert, 1999. "Using equivalent income of equivalent adults to rank income distributions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(2), pages 233-258.
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    Citations

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    Cited by:

    1. Peter J. Lambert & Shlomo Yitzhaki, 2013. "The Inconsistency Between Measurement and Policy Instruments in Family Income Taxation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(3), pages 241-255, September.
    2. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    3. Julio López-Laborda & Jorge Onrubia, 2005. "Personal Income Tax Decentralization, Inequality, and Social Welfare," Public Finance Review, , vol. 33(2), pages 213-235, March.
    4. Claudio Zoli, 2012. "Characterizing Inequality Equivalence Criteria," Working Papers 32/2012, University of Verona, Department of Economics.
    5. Udo Ebert, 2010. "Equity-regarding poverty measures: differences in needs and the role of equivalence scales," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 301-322, February.
    6. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    7. repec:old:wpaper:331 is not listed on IDEAS
    8. Udo Ebert & Patrick Moyes, 2000. "Adjusting Incomes for Needs: Can One Avoid Equivalence Scales?," Econometric Society World Congress 2000 Contributed Papers 0917, Econometric Society.
    9. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, vol. 69(1), pages 55-67, July.
    10. Udo Ebert & Peter J. Lambert, 2004. "Horizontal Equity and Progression When Equivalence Scales Are Not Constant," Public Finance Review, , vol. 32(4), pages 426-440, July.
    11. Udo Ebert, 2008. "Living Standard, Social Welfare, and the Redistribution of Income in a Heterogeneous Population," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 873-889, October.
    12. Achille VERNIZZI & Maria Giovanna MONTI & Marek KOSNY, 2006. "An overall inequality reducing and horizontally equitable tax system with application to Polish data," Departmental Working Papers 2006-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    13. Luis José Imedio Olmedo & Encarnación Macarena Parrado Gallardo & María Dolores Sarrión Gavilán, 2005. "Horizontal equity, equal progression: an utilitarian approach," Hacienda Pública Española, IEF, vol. 174(3), pages 87-115, September.
    14. repec:zbw:hohpro:331 is not listed on IDEAS
    15. Peter J. Lambert, 2007. "Positional equity and equal sacrifice: design principles for an EU-wide income tax?," Working Papers 0706, University of Otago, Department of Economics, revised Apr 2007.

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