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On the Inefficiency of Inequality

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  • Schiff, Maurice

    (World Bank)

Abstract

A number of studies have examined the implications of preference interdependence. This paper models utility as depending on other people’s consumption levels and shows that welfare declines with inequality, equilibrium inequality is inefficient, and the optimal intervention leads to a more equal distribution.

Suggested Citation

  • Schiff, Maurice, 2004. "On the Inefficiency of Inequality," IZA Discussion Papers 1283, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1283
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    Cited by:

    1. Gruen, Carola & Klasen, Stephan, 2012. "Has transition improved well-being?," Economic Systems, Elsevier, vol. 36(1), pages 11-30.

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    More about this item

    Keywords

    inequality; efficiency;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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