IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v22y1994i4p403-417.html
   My bibliography  Save this article

Effect of Marginal Changes in Income Sources On U.S. Income Inequality

Author

Listed:
  • Robert I. Lerman

    (The American University)

  • Shlomo Yitzhaki

    (Hebrew University)

Abstract

The success of public policies often turns on their distributional impacts. Policy analyses often compare inequality before and after the policy change, but such global estimates are sensitive to the ordering of income sources. This article presents a method for estimating distributional effects of marginal changes in income sources—including taxes and transfers—on the Gini coefficient and the extended Gini (which permits explicit focus on segments of distribution). The authors show how to integrate robustness and behavioral effects and to compare inequality effects across programs. The application yields estimates of the inequality impact per one dollar change in various U.S. taxes and transfers.

Suggested Citation

  • Robert I. Lerman & Shlomo Yitzhaki, 1994. "Effect of Marginal Changes in Income Sources On U.S. Income Inequality," Public Finance Review, , vol. 22(4), pages 403-417, October.
    • Handle: RePEc:sae:pubfin:v:22:y:1994:i:4:p:403-417
    DOI: 10.1177/109114219402200401
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114219402200401
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114219402200401?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yitzhaki, Shlomo & Slemrod, Joel, 1991. "Welfare Dominance: An Application to Commodity Taxation," American Economic Review, American Economic Association, vol. 81(3), pages 480-496, June.
    2. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    3. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    4. Fichtenbaum, Rudy & Shahidi, Hushang, 1988. "Truncation Bias and the Measurement of Income Inequality," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 335-337, July.
    5. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-740, September.
    6. Donaldson, David & Weymark, John A., 1983. "Ethically flexible gini indices for income distributions in the continuum," Journal of Economic Theory, Elsevier, vol. 29(2), pages 353-358, April.
    7. Yitzhaki, Shlomo, 1982. "Relative deprivation and economic welfare," European Economic Review, Elsevier, vol. 17(1), pages 99-113.
    8. Sheldon Danziger & Michael K. Taussing, 1979. "The Income Unit And The Anatomy Of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 365-375, December.
    9. repec:bla:revinw:v:25:y:1979:i:4:p:365-75 is not listed on IDEAS
    10. John D. Hey & Peter J. Lambert, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 567-573.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Essama-Nssah, B., 2002. "Assessing the distributional impact of public policy," Policy Research Working Paper Series 2883, The World Bank.
    2. Fitoussi, Jean-Paul & Van Haeperen, Béatrice, 1998. "Inégalités de revenus, marchés du travail et politique de transferts. Comparaison internationale et décomposition par sources de revenus," LIDAM Discussion Papers IRES 1998027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Thesia Garner & Katherine Terrell, 2001. "Some Explanations for Changes in the Distribution of Household Income in Slovakia: 1988 and 1996," William Davidson Institute Working Papers Series 377, William Davidson Institute at the University of Michigan.
    4. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inégalité et bien-être social [Inequality and Social Welfare]," MPRA Paper 10488, University Library of Munich, Germany.
    5. Andrés Pereyra & Marcelo Pérez, 2013. "Distributive impact of transport expenditure: the case of Uruguay," Documentos de Investigación 90, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.
    6. Judith Möllers & Wiebke Meyer, 2014. "The effects of migration on poverty and inequality in rural Kosovo," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-18, December.
    7. Möllers, Judith & Buchenrieder, Gertrud, 2011. "Effects of Rural Non-farm Employment on Household Welfare and Income Distribution of Small Farms in Croatia," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 50(3), pages 1-19.
    8. Paul Makdissi & Quentin Wodon, 2012. "Gini Decomposition And Gini Income Elasticity Under Income Variability," Bulletin of Economic Research, Wiley Blackwell, vol. 64(2), pages 184-191, April.
    9. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inequality and Social Welfare," MPRA Paper 12298, University Library of Munich, Germany.
    10. Akli Berri, 2009. "Transport consumption inequalities and redistributive effects of taxes: A repeated cross-sectional evaluation on French household data," Working Papers 145, ECINEQ, Society for the Study of Economic Inequality.
    11. Michele Giammatteo, 2007. "The bidimensional decomposition of inequality: A nested Theil approach," LIS Working papers 466, LIS Cross-National Data Center in Luxembourg.
    12. Quentin T. Wodon, 1999. "Between Group Inequality And Targeted Transfers," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 21-39, March.
    13. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Неравенство И Общественное Благосостояние [Inequality and Social Welfare]," MPRA Paper 10489, University Library of Munich, Germany.
    14. Ivica Urban, 2009. "Kakwani decomposition of redistributive effect: Origins, critics and upgrades," Working Papers 148, ECINEQ, Society for the Study of Economic Inequality.
    15. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Desigualdad y bienestar social [Inequality and Social Welfare]," MPRA Paper 10487, University Library of Munich, Germany.
    16. Ivica Urban, 2022. "Two classical decompositions of the Gini index by income sources: interpretation of contribution terms," Working Papers 618, ECINEQ, Society for the Study of Economic Inequality.
    17. M Leibbrandt & H Bhorat & I Woolard, 2001. "Household Inequality And The Labor Market In South Africa," Contemporary Economic Policy, Western Economic Association International, vol. 19(1), pages 73-86, January.
    18. Simona ILIE, 2020. "Income Inequalities in Romania in the Aftermath of the 2008 Economic Crisis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 115-130, July.
    19. Quentin Wodon & Shlomo Yitzhaki, 2002. "Evaluating the Impact of Government Programs on Social Welfare: The Role of Targeting and the Allocation Rules Among Program Beneficiaries," Public Finance Review, , vol. 30(2), pages 102-123, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yitzhaki, Shlomo, 2002. "Do we need a separate poverty measurement?," European Journal of Political Economy, Elsevier, vol. 18(1), pages 61-85, March.
    2. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Неравенство И Общественное Благосостояние [Inequality and Social Welfare]," MPRA Paper 10489, University Library of Munich, Germany.
    3. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Desigualdad y bienestar social [Inequality and Social Welfare]," MPRA Paper 10487, University Library of Munich, Germany.
    4. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inequality and Social Welfare," MPRA Paper 12298, University Library of Munich, Germany.
    5. Wodon, Quentin & Yitzhaki, Shlomo, 2002. "Inégalité et bien-être social [Inequality and Social Welfare]," MPRA Paper 10488, University Library of Munich, Germany.
    6. Anatilde Salerno, 2017. "El Impacto Redistributivo del Gasto Social en Argentina (2003-2015): Una Herramienta para Evaluar las Politicas Publicas de Asignacion Social," Commitment to Equity (CEQ) Working Paper Series 79, Tulane University, Department of Economics.
    7. Wang, Chen & Caminada, Koen, 2011. "Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries," MPRA Paper 32821, University Library of Munich, Germany.
    8. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Income Inequality and Fiscal Redistribution in 31 Countries After the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 119-148, March.
    9. David (David Patrick) Madden & Cathal Clancy, 2005. "Growth and inequality in Ireland : 1987 - 1999," Working Papers 200516, School of Economics, University College Dublin.
    10. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April.
    11. Alain Chateauneuf & Patrick Moyes, 2002. "Measuring inequality without the Pigou-Dalton condition," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00156475, HAL.
    12. repec:ebl:ecbull:v:3:y:2003:i:19:p:1-16 is not listed on IDEAS
    13. Severini, Simone & Tantari, A., 2012. "How direct payments and their reform have affected farm income inequality in Italy?," 2012 First Congress, June 4-5, 2012, Trento, Italy 124099, Italian Association of Agricultural and Applied Economics (AIEAA).
    14. Gerardo Esquivel, 2011. "The Dynamics of Income Inequality in Mexico since NAFTA," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2011), pages 155-188, August.
    15. Reinhard Schiel & Murray Leibbrandt & David Lam, 2016. "Assessing the Impact of Social Grants on Inequality: A South African Case Study," International Economic Association Series, in: Timothy Besley (ed.), Contemporary Issues in Development Economics, chapter 8, pages 112-135, Palgrave Macmillan.
    16. Zhao, Ge & Zhou, P. & Wen, Wen, 2022. "What cause regional inequality of technology innovation in renewable energy? Evidence from China," Applied Energy, Elsevier, vol. 310(C).
    17. Tushar Agrawal & Ankush Agrawal, 2023. "Beyond Consumption Expenditure: Income Inequality and Its Sources in India," Progress in Development Studies, , vol. 23(1), pages 7-27, January.
    18. M. Fort & N. Schneeweis & R. Winter-Ebmer, 2011. "More Schooling, More Children: Compulsory Schooling Reforms and Fertility in Europe," Working Papers wp787, Dipartimento Scienze Economiche, Universita' di Bologna.
    19. Muhammad Shahbaz & Ijaz Rehman & Nurul Mahdzan, 2014. "Linkages between income inequality, international remittances and economic growth in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1511-1535, May.
    20. Iryna Kyzyma & Alessio Fusco & Philippe Van Kerm, 2022. "Distributional Change: Assessing the Contribution of Household Income Sources," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 158-184, February.
    21. Monti Maria Giovanna & Pellegrino Simone & Vernizzi Achille, 2024. "The Zenga Index Reveals More Than the Gini and the Bonferroni Indexes. An Analysis of Distributional Changes and Social Welfare Levels," Working papers 084, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:22:y:1994:i:4:p:403-417. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.