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Lorenz dominance and non-welfaristic redistribution

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  • R.I. LUTTENS

    ()

  • D. VAN DE GAER

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Abstract

Given the decision to implement a non-welfaristic redistribution scheme, we analyze which mechanisms are favored by traditional Lorenz dominance and poverty dominance adherents. We show that for large classes of income functions Lorenz dominance results can be found in the comparison of two egalitarian equivalent mechanisms. Comparisons of different conditionally egalitarian mechanisms only yield poverty dominance results. Finally, certain egalitarian equivalent mechanisms can Lorenz dominate all conditionally egalitarian mechanisms. Our analysis stresses the need for accurate empirical estimates of the pre-tax income function and of the distributions of responsibility and compensation characteristics.

Suggested Citation

  • R.I. Luttens & D. Van De Gaer, 2004. "Lorenz dominance and non-welfaristic redistribution," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/225, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:04/225
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    File URL: http://wps-feb.ugent.be/Papers/wp_04_225.pdf
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    References listed on IDEAS

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    1. Bossert W., 1996. "Redistribution mechanisms based on individual characteristics," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 51-51, February.
    2. Anthony F. Shorrocks & James E. Foster, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 485-497.
    3. Dirk Van de gaer & Marc Fleurbaey & Walter Bossert, 1999. "Responsibility, talent, and compensation: A second-best analysis," Review of Economic Design, Springer;Society for Economic Design, vol. 4(1), pages 35-55.
    4. Schokkaert, Erik & Van de gaer, Dirk & Vandenbroucke, Frank & Luttens, Roland Iwan, 2004. "Responsibility sensitive egalitarianism and optimal linear income taxation," Mathematical Social Sciences, Elsevier, vol. 48(2), pages 151-182, September.
    5. Elisha A. Pazner & David Schmeidler, 1978. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 671-687.
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    Cited by:

    1. Fleurbaey, Marc & Schokkaert, Erik, 2009. "Unfair inequalities in health and health care," Journal of Health Economics, Elsevier, vol. 28(1), pages 73-90, January.
    2. Xavier Ramos & Dirk Van de gaer, 2012. "Empirical Approaches to Inequality of Opportunity: Principles, Measures, and Evidence," Working Papers wpdea1208, Department of Applied Economics at Universitat Autonoma of Barcelona.
    3. Van de gaer, Dirk & Ramos, Xavier, 2015. "Measurement of Inequality of Opportunity Based on Counterfactuals," IZA Discussion Papers 9582, Institute for the Study of Labor (IZA).
    4. Schokkaert, Erik & Van de Voorde, Carine, 2009. "Direct versus indirect standardization in risk adjustment," Journal of Health Economics, Elsevier, vol. 28(2), pages 361-374, March.

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