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Remittances, Lorenz Dominance in the Distribution of Income and Redistribution

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  • Raul Alberto Ponce Rodriguez
  • Ikuho Kochi

Abstract

We analyze how changes in the distribution of income, characterized by the comparison of Lorenz curves, affect public redistribution for an economy with international interfamily transfers (remittances). Our analysis suggests that a fall in the inequality of income might increase or reduce the government’s ability to collect tax revenue and its electoral costs from inefficient taxation which in turn affect public redistribution. The main contribution of this paper is to characterize conditions in which a shift towards a dominant Lorenz curve can lead to an increase or fall in public redistribution. We also find that the composition of a change in the distribution of income, promoted by a change in the distribution of labor income or remittances, leads to different effects on the size of public redistribution.

Suggested Citation

  • Raul Alberto Ponce Rodriguez & Ikuho Kochi, 2017. "Remittances, Lorenz Dominance in the Distribution of Income and Redistribution," Review of Economics and Institutions, Università di Perugia, vol. 8(1).
    • Handle: RePEc:pia:review:v:8:y:2017:i:1:n:1
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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