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A Public Finance Approach to Assessing Poverty Alleviation

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  • Shlomo Yitzhaki

Abstract

This paper points out the similarities and differences between cost-benefit analysis and tax reform. By restricting the analysis to the margin it is shown that both areas can be handled by the same method. In both areas, there is a need to define social distributional weights and to evaluate the Marginal Efficiency of Public Funds (MECF). It is suggested that the social distributional weights be derived from popular inequality indices. Such derivation, enables the decomposition of the impact of the project (tax reform) on growth and redistribution so that one can evaluate the trade-off between the two.

Suggested Citation

  • Shlomo Yitzhaki, 2001. "A Public Finance Approach to Assessing Poverty Alleviation," NBER Working Papers 8062, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8062
    Note: PE
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    References listed on IDEAS

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    1. Martin Ravallion & Gaurav Datt, 1995. "Is Targeting Through a Work Requirement Efficient? Some Evidence for Rural India," Monash Economics Working Papers archive-41, Monash University, Department of Economics.
    2. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
    3. Harberger, Arnold C, 1978. "On the Use of Distributional Weights in Social Cost-Benefit Analysis," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 87-120, April.
    4. Mayshar, Joram & Yitzhaki, Shlomo, 1995. "Dalton-Improving Indirect Tax Reform," American Economic Review, American Economic Association, vol. 85(4), pages 793-807, September.
    5. Squire, Lyn, 1980. "On the Use of Distributional Weights in Social Cost-Benefit Analysis," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 1048-1049, October.
    6. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989 Elsevier.
    7. Devarajan, Shantayanan & Squire, Lyn & Suthiwart-Narueput, Sethaput, 1995. "Reviving project appraisal at the World Bank," Policy Research Working Paper Series 1496, The World Bank.
    8. Yitzhaki, Shlomo, 1982. "Relative deprivation and economic welfare," European Economic Review, Elsevier, vol. 17(1), pages 99-113.
    9. Sen, Amartya, 1998. "Mortality as an Indicator of Economic Success and Failure," Economic Journal, Royal Economic Society, vol. 108(446), pages 1-25, January.
    10. Yitzhaki, Shlomo & Slemrod, Joel, 1991. "Welfare Dominance: An Application to Commodity Taxation," American Economic Review, American Economic Association, vol. 81(3), pages 480-496, June.
    11. Besley, Timothy J & Kanbur, S M Ravi, 1988. "Food Subsidies and Poverty Alleviation," Economic Journal, Royal Economic Society, vol. 98(392), pages 701-719, September.
    12. Jenkins, Glenn P, 1997. "Project Analysis and the World Bank," American Economic Review, American Economic Association, vol. 87(2), pages 38-42, May.
    13. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
    14. Dixit, Avinash, 1987. "On Pareto-improving redistributions of aggregate economic gains," Journal of Economic Theory, Elsevier, vol. 41(1), pages 133-153, February.
    15. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-628, October.
    16. Kleiman, Ephraim, 1972. "The Frustration and Enhancement of Income Redistribution," Kyklos, Wiley Blackwell, vol. 25(2), pages 288-305.
    17. Layard, Richard, 1980. "On the Use of Distributional Weights in Social Cost-Benefit Analysis," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 1041-1047, October.
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    Citations

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    Cited by:

    1. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Неравенство И Общественное Благосостояние
      [Inequality and Social Welfare]
      ," MPRA Paper 10489, University Library of Munich, Germany.
    2. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inégalité et bien-être social
      [Inequality and Social Welfare]
      ," MPRA Paper 10488, University Library of Munich, Germany.
    3. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Desigualdad y bienestar social
      [Inequality and Social Welfare]
      ," MPRA Paper 10487, University Library of Munich, Germany.
    4. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inequality and Social Welfare," MPRA Paper 12298, University Library of Munich, Germany.
    5. Ajwad, Mohamed Ishan & Wodon, Quentin, 2002. "Who Benefits from Increased Access to Public Services at the Local Level? A Marginal Benefit Incidence Analysis for Education and Basic Infrastructure," MPRA Paper 12309, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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