Inequality and Social Welfare

Wodon, Quentin and Yitzhaki, Shlomo (2002): Inequality and Social Welfare. Published in: A Sourcebook for Poverty Reduction Strategies , Vol. 1, (April 2002): pp. 75-104.

Abstract

This paper provides a review of part of the literature on inequality and social welfare, with a special focus on the Gini index. The paper first presents the extended Gini index used for measuring inequality, as well as the source decomposition of the Gini used to analyze how changes in income and consumption sources affect overall inequality. The paper then provides a wide range of policy applications of the source decomposition of the extended Gini index, including techniques for analyzing the impact on inequality of the targeting of programs as opposed to the rules for the allocation of benefits among program participants.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality; Social welfare
• Subjects: D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs

References

Ahmad, E., and N. Stern. 1987. Alternative Sources of Government Revenue: Illustrations from India 1979–1980. In D. Newbery and N. Stern, eds., The Theory of Taxation for Developing Countries. London: Oxford University Press.

Atkinson, A. B. 1970. On the Measurement of Inequality. Journal of Economic Theory 2(4):244–63.

Castro-Fernandez, R., and Q. Wodon. 2001. Protecting the Unemployed in Chile: From State Assistance to Individual Insurance?” Poverty and Income Distribution in a High Growth Economy: The Case of Chile 1987–98. Report 22037-CH, Washington, D.C.: World Bank.

Clert, C., and Q. Wodon. 2001. The Targeting of Government Programs in Chile: A Quantitative and Qualitative Assessment. Poverty and Income Distribution in a High Growth Economy: The Case of Chile 1987–98. Report 22037-CH, Washington, D.C.: World Bank.

Cord, C., and Q. Wodon. Forthcoming. Do Mexico’s Agricultural Programs Alleviate Poverty? Evidence from the Ejido Sector. Cuadernos de Economia 38(114):239–56.

Devarajan, S., and K. Thierfelder. 2000, The Marginal Cost of Public Funds in Developing Countries. World Bank, Washington, D.C. Processed.

Donaldson, D., and J. A. Weymark. 1983. Ethically Flexible Gini Indices for Income Distributions in the Continuum. Journal of Economic Theory 29:353–58.

Ebert, U., and P. Moyes. 2000. An Axiomatic characterization of Yitzhaki’s Index of Individual Deprivation. Economics Letters 68(3):263–70.

Garner, T. I. 1993. Consumer Expenditures and Inequality: An Analysis Based on Decomposition of the Gini Coefficient. Review of Economics and Statistics 75(1):134–38.

Lerman, R. I. 1999. How Do Income Sources Affect Income Inequality? In J. Silber, ed., Handbook of Income Inequality Measurement. Boston: Kluwer Academic Publishers.

Lerman, R. I., and S. Yitzhaki. 1985. Income Inequality Effects by Income Source: A New Approach and Application to the U.S. Review of Economics and Statistics 67(1):151–56.

Lerman, R. I., and S. Yitzhaki. 1994. The Effect of Marginal Changes in Income Sources on U.S. Income Inequality. Public Finance Quarterly 22(4):403–17.

Piotrowska, M. 2000. Taxes and Transfers as Instruments Influencing Income Inequality in Transition Countries. Paper presented at the Conference of the International Society for Quality of Life Studies, Girona, Spain.

Runciman, W. G. 1966. Relative Deprivation and Social Justice. London: Routledge and Kegan Paul.

Schechtman, E., and S. Yitzhaki. 1987. A Measure of Association Based on Gini’s Mean Difference. Communications in Statistics: Theory and Methods A16:207–31.

Sen, A. 1973. On Economic Inequality. Oxford: Clarendon Press.

Sen, A. 1976. Real National Income. Review of Economic Studies 43(1):19–39.

Siaens, C., and Q. Wodon. 2001. Access to Basic Infrastructure Services, Poverty, and Inequality. World Bank, Washington, D.C. Processed.

Stark, O., J. Taylor, and S. Yitzhaki. 1986. Remittances and Inequality. Economic Journal 96(383):722–40.

Wodon, Q., R. Ayres, M. Barenstein, N. Hicks, K. Lee, W. Maloney, P. Peeters, C. Siaens, and S. Yitzhaki. 2000. Poverty and Policy in Latin America and The Caribbean. World Bank Technical Paper 467. Washington, D.C.

Wodon, Q., and C. Siaens. 1999. Food Subsidies and Consumption Inequality in Mexico. In World Bank Government Programs and Poverty in Mexico. Report 19214-ME. Washington, D.C.: World Bank.

Wodon, Q., and S. Yitzhaki. Forthcoming. Evaluating the Impact of Government Programs on Social Welfare: The Role of Targeting and the Allocation Rules Among Program Beneficiaries. Public Finance Review.

Yitzhaki, S. 1979. Relative Deprivation and the Gini Coefficient. Quarterly Journal of Economics 93(2):321–24.

Yitzhaki, S. 1982. Relative Deprivation and Economic Welfare. European Economic Review 17:99–113.

Yitzhaki, S. 1999. Introducing Distributional Considerations into Tax Policy. Paper presented for the Conference on the Katz Committee Report. Johannesburg, South Africa.

Yitzhaki, S. 2000. A Public Finance Approach to Assessing Poverty Alleviation. Hebrew University, Jerusalem. Processed.

Yitzhaki, S. Forthcoming. Do We Need a Separate Poverty Measurement? European Journal of Political Economy.