Inequality Within and Between Families
Between-family differences in expenditures and output reflect the effect of simultaneous increases in children's ability on the willingness of parents to transfer resources to them. Within-family differences also reflect the attitudes of parents toward disparity among children. In this paper we characterize the conditions on parents' preferences that determine whether between-family differences exceed within-family differences. For an additive utility, within-family differences in expenditures always exceed between-family differences. This may also be true for the maximum utility function if an increase in ability reduces the marginal utility of income. Within-family differences in output (utility or income) can also exceed between-family differences. In this case, the implication for income distribution is that equality is enhanced by a higher correlation of ability between brothers.
|Date of creation:||Nov 1979|
|Date of revision:|
|Publication status:||published as Journal of Political Economy, Vol. 90, no. 1 (1982): 105-127.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Green, Jerry & Sheshinski, Eytan, 1975.
"A Note on the Progressivity of Optimal Public Expenditures,"
3203641, Harvard University Department of Economics.
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NBER Working Papers
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- Kenneth J. Arrow, 1971. "A Utilitarian Approach to the Concept of Equality in Public Expenditures," The Quarterly Journal of Economics, Oxford University Press, vol. 85(3), pages 409-415.
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