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Inequality Within And Among Nations

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  • Michael C. Lovell

    (Wesleyan University)

Abstract

This paper looks at both within country and among country inequality. In the spirit of Dalton[1920] and Atkinson[1970] 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[1982] 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.

Suggested Citation

  • Michael C. Lovell, 1998. "Inequality Within And Among Nations," Wesleyan Economics Working Papers 1998-001, Wesleyan University, Department of Economics.
  • Handle: RePEc:wes:weswpa:1998-001
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    File URL: http://repec.wesleyan.edu/pdf/mlovell/1998001_lovell.pdf
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    References listed on IDEAS

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    1. Summers, Robert & Kravis, Irving B. & Heston, Alan, 1984. "Changes in the world income distribution," Journal of Policy Modeling, Elsevier, vol. 6(2), pages 237-269, May.
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    Cited by:

    1. Gertrudes Saúde Guerreiro, 2012. "Regional Income Distribution in Portugal," CEFAGE-UE Working Papers 2012_06, University of Evora, CEFAGE-UE (Portugal).

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    More about this item

    Keywords

    Inequality; Income Distribution; Gini Coefficient; Relative Deprivation; Lorenz Dominance; Generalized Lorenz Curve; Veil of Ignorance; Equally Distributed Equivalent Income; Interdependent utilities; Tax price of public goods;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • P5 - Economic Systems - - Comparative Economic Systems

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