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Can Equity and Efficiency Complement Each Other?

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  • Rebecca M. Blank

Abstract

Economists tend to assume that redistributive transfers increase equity but cause a loss in efficiency, the so-called 'leaky bucket' effect. This paper explores situations where efficiency losses are small or where equity and efficiency might even complement each other. A simple model identifies key parameters that cause leaky buckets and which policy can affect. Three situations are discussed where the equity/efficiency tradeoff may be low: When transfers go to populations with no capacity to change their behavior; when transfers go to programs that limit efficiency losses through behavioral requirements; and when commodities are subsidized that function as long-term investments and create future income gains.

Suggested Citation

  • Rebecca M. Blank, 2002. "Can Equity and Efficiency Complement Each Other?," NBER Working Papers 8820, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8820
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    References listed on IDEAS

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    Cited by:

    1. Sahrbacher, Amanda, 2012. "Impacts of CAP reforms on farm structures and performance disparities: An agent-based approach," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 65, number 65.
    2. Asplund, Rita, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy.
    3. Alfonso Arpaia & Gilles Mourre, 2012. "Institutions And Performance In European Labour Markets: Taking A Fresh Look At Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 1-41, February.
    4. Jordan D. Matsudaira & Rebecca M. Blank, 2014. "The Impact of Earnings Disregards on the Behavior of Low‐Income Families," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 33(1), pages 7-35, January.
    5. repec:iab:iabzaf:v:37:i:2:p:127-145 is not listed on IDEAS
    6. Nordén, Anna, 2014. "Payment Types and Participation in Payment for Ecosystem Services Programs: Stated Preferences of Landowners," Working Papers in Economics 591, University of Gothenburg, Department of Economics.
    7. Figari, Francesco, 2011. "From housewives to independent earners: can the tax system help Italian women to work?," ISER Working Paper Series 2011-15, Institute for Social and Economic Research.
    8. Martin Stadelmann & Åsa Persson & Izabela Ratajczak-Juszko & Axel Michaelowa, 2014. "Equity and cost-effectiveness of multilateral adaptation finance: are they friends or foes?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 14(2), pages 101-120, May.
    9. Nikolai Hoberg & Stefan Baumgärtner, 2014. "Value pluralism, trade-offs and efficiencies," Working Paper Series in Economics 311, University of Lüneburg, Institute of Economics.
    10. Berthold, Norbert & von Berchem, Sascha, 2003. "Die Sozialhilfe zwischen Effizienz und Gerechtigkeit: wie kann der Spagat gelingen?," Discussion Paper Series 62, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    11. repec:gam:jecomi:v:6:y:2018:i:2:p:34-:d:149313 is not listed on IDEAS
    12. Gerdes, Christer, 2015. "Does Performance Information Affect Job Seekers in Selecting Private Providers in Voucher-Based ALMP Programs?," IZA Discussion Papers 8992, Institute for the Study of Labor (IZA).
    13. Ryta I. Dziemianowicz & Adam Wyszkowski & Renata Budlewska, 2014. "Tax expenditures jako ukryta forma wydatków publicznych," Gospodarka Narodowa, Warsaw School of Economics, issue 3, pages 35-62.
    14. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582, November.
    15. Pfeifer, Christian, 2004. "Fairness und Kündigungen : eine theoretische und empirische Analyse (Fairness and layoffs * a theoretical and empirical analysis)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(2), pages 127-145.

    More about this item

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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