Inequality Within And Among Nations
This paper looks at both within country and among country inequality. In the spirit of Dalton and Atkinson this paper reports estimates of the welfare loss arising from inequality. The paper also explores the implications of Duesenberry style interdependent utility functions when a Utilitariansocial welfare function is employed and evaluates the appropriateness of the Gini coefficient and the coefficient of variation as possible measures of “depression” or “relative deprivation.” The paper reports a variety of measures of inequality for the 82 countries for which comparable data are available from the 1996 World Development Report. In 18% of the pair-wise comparisons of inequality in different countries the situation is ambiguous in the sense that neither country Lorenz dominates the other. Shorrocks Generalized Lorenz curves leave ambiguous 16% of paired welfare comparisons. By a wide variety of alternative measures, inequality among nations is much greater than inequality within countries. The data generated a surprising empirical result: for any utility function satisfying Dalton’s Principle of Transfers, the loss of welfare arising from within country inequality is approximately 40% of the loss caused by inequality among nations.
|Date of creation:||Jul 1998|
|Date of revision:|
|Publication status:||Published in Journal of Income Distribution,(1), 1998|
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