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Inequality Within and Between Families

  • Eytan Sheshinski
  • Yoram Weiss

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.

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File URL: http://www.nber.org/papers/w0405.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0405.

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Date of creation: Nov 1979
Date of revision:
Publication status: published as Journal of Political Economy, Vol. 90, no. 1 (1982): 105-127.
Handle: RePEc:nbr:nberwo:0405
Note: CH
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  1. Green, Jerry R & Sheshinski, Eytan, 1975. "A Note on the Progressivity of Optimal Public Expenditures," The Quarterly Journal of Economics, MIT Press, vol. 89(1), pages 138-44, February.
  2. Arrow, Kenneth J, 1971. "A Utilitarian Approach to the Concept of Equality in Public Expenditure," The Quarterly Journal of Economics, MIT Press, vol. 85(3), pages 409-15, August.
  3. Gary S. Becker & Nigel Tomes, 1976. "Child Endowments, and the Quantity and Quality of Children," NBER Working Papers 0123, National Bureau of Economic Research, Inc.
  4. Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S37-64, October.
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