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Restricted and Unrestricted Dominance for Welfare, Inequality and Poverty Orderings

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  • Duclos, Jean-Yves
  • Makdissi, Paul

Abstract

This paper extends the previous literature on the normative links between the measurement of poverty, social welfare and inequality. We show how, when the range of possible poverty lines is unbounded above, a robust ranking of absolute poverty may be interpreted as a robust ranking of social welfare, and a robust ranking of relative poverty may be interpreted as a robust ranking of inequality for any order of stochastic dominance. This interpretation is also valid when the maximum poverty line is bounded and for certain orders of stochastic dominance, so long as social welfare and inequality judgements are "censored". We also develop new criteria of restricted inequality dominance, and find that they warn against the use of some popular indices of relative poverty and censored inequality. Finally, we illustrate geometrically how the new criteria of restricted inequality dominance extends the rankings power of previously proposed dominance criteria.

Suggested Citation

  • Duclos, Jean-Yves & Makdissi, Paul, 2000. "Restricted and Unrestricted Dominance for Welfare, Inequality and Poverty Orderings," Cahiers de recherche 0001, Université Laval - Département d'économique.
  • Handle: RePEc:lvl:laeccr:0001
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    Cited by:

    1. Valentini, Edilio, 2015. "Indirect taxation, public pricing and price cap regulation: A synthesis," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-39.
    2. Paul Makdissi & Quentin Wodon, 2004. "Robust Comparisons of Natural Resources Depletion Indices," Economics Bulletin, AccessEcon, vol. 9(2), pages 1-9.
    3. William Horrace & Joseph Marchand & Timothy Smeeding, 2008. "Ranking inequality: Applications of multivariate subset selection," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(1), pages 5-32, March.
    4. Eduardo Michel Camacho & Willy W. Cortez, 2012. "Distribución del ingreso y bienestar social en México 1984-2008," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(2), pages 347-378.
    5. Duclos, Jean-Yves & Makdissi, Paul & Wodon, Quentin, 2003. "Poverty-Efficient Transfer Programs: The Role of Targeting and Allocation Rules," Cahiers de recherche 0305, CIRPEE.
    6. Duclos, Jean-Yves & Makdissi, Paul & Wodon, Quentin, 2005. "Poverty-dominant program reforms: the role of targeting and allocation rules," Journal of Development Economics, Elsevier, vol. 77(1), pages 53-73, June.
    7. Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, vol. 83(1), pages 109-140, May.
    8. Jean-Yves Duclos, 2009. "What is “Pro-Poor”?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(1), pages 37-58, January.
    9. Jean-Yves Duclos & Paul Makdissi & Quentin Wodon, 2008. "Socially Improving Tax Reforms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1505-1537, November.
    10. Paul Makdissi & Jean-Yves Duclos, 2001. "Restricted Inequality and Relative Poverty," Cahiers de recherche 01-06, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    11. Jean-Yves Duclos & Paul Makdissi & Abdelkrim Araar, 2014. "Pro-poor indirect tax reforms, with an application to Mexico," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 87-118, February.
    12. Makdissi, Paul & Groleau, Yves, 2002. "Que pouvons-nous apprendre des profils de pauvreté canadiens?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 78(2), pages 257-286, Juin.
    13. Paul Makdissi & Quentin Wodon, 2000. "Consumption Dominance Curves: Testing for the Impact of Tax Reforms on Poverty," Cahiers de recherche 00-05, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    14. Bibi, Sami & Duclos, Jean-Yves, 2010. "Y a-t-il plus de pauvreté au Québec qu’au Canada?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(3), pages 277-318, septembre.
    15. Carlos Gradín, 2013. "Conditional occupational segregation of minorities in the US," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 473-493.
    16. Bram Thuysbaert, 2008. "Inference for the measurement of poverty in the presence of a stochastic weighting variable," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(1), pages 33-55, March.
    17. Paul Makdissi & Stéphane Mussard, 2008. "Analyzing the impact of indirect tax reforms on rank-dependent social welfare functions: a positional dominance approach," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(3), pages 385-399, April.
    18. Ravallion,Martin & Chen,Shaohua, 2017. "Welfare-consistent global poverty measures," Policy Research Working Paper Series 8170, The World Bank.
    19. Duclos, Jean-Yves & Makdissi, Paul & Araar, Abdelkrim, 2009. "Pro-Poor Tax Reforms, with an Application to Mexico," IZA Discussion Papers 4511, Institute for the Study of Labor (IZA).
    20. Garcia-Diaz, Rocio & Sosa-Rub, Sandra G., 2011. "Analysis of the distributional impact of out-of-pocket health payments: Evidence from a public health insurance program for the poor in Mexico," Journal of Health Economics, Elsevier, vol. 30(4), pages 707-718, July.
    21. Alex Siméon & Dorothée Boccanfuso, 2006. "Dynamique de la pauvreté en Haïti et ses déterminants," Cahiers de recherche 06-15, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    22. James Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster–Greer–Thorbecke (FGT) poverty measures: 25 years later," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(4), pages 491-524, December.
    23. James E. Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster-Greer-Thorbecke (FGT) Poverty Measures: Twenty-Five Years Later," Working Papers 2010-14, The George Washington University, Institute for International Economic Policy.
    24. Makdissi, Paul & Wodon, Quentin, 2002. "Consumption dominance curves: testing for the impact of indirect tax reforms on poverty," Economics Letters, Elsevier, vol. 75(2), pages 227-235, April.
    25. repec:ebl:ecbull:v:9:y:2004:i:2:p:1-9 is not listed on IDEAS

    More about this item

    Keywords

    Welfare; Inequality; Poverty; Stochastic Dominance;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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