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Lorenz dominance and non-welfaristic redistribution

  • R.I. LUTTENS

    ()

  • D. VAN DE GAER

    ()

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.

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File URL: http://wps-feb.ugent.be/Papers/wp_04_225.pdf
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Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 04/225.

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Length: 28 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:rug:rugwps:04/225
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Web page: http://www.ugent.be/eb

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  1. 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.
  2. Bossert, W., 1993. "Redistribution Mechanisms Based on Individual Characteristics," Working Papers 9307, University of Waterloo, Department of Economics.
  3. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  4. Elisha A. Pazner & David Schmeidler, 1975. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," Discussion Papers 174, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Dirk Van de gaer & Marc Fleurbaey & Walter Bossert, 1999. "Responsibility, talent, and compensation: A second-best analysis," Review of Economic Design, Springer, vol. 4(1), pages 35-55.
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