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Optimal redistribution behind the veil of ignorance

Author

Listed:
  • Antonio Abatemarco

    (University of Salerno)

  • Francesca Stroffolini

    (University of Napoli “Federico II”)

Abstract

We propose a formalization of the Difference Principle (maximin) by which Rawls’ contribution is shown to go beyond distributive value judgments in such a way as to embrace efficiency issues as well. In our model, inequalities are shown to be permitted as far as they stimulate a greater effort in education (or training), and so economic growth. This is the only possibility for an income disparity to be unanimously accepted by both the most-, and above all, the least-advantaged individual. In this vein, we highlight the peculiarity of the Rawlsian equity-efficiency trade off behind the veil of ignorance. Finally, by recalling the old tradition of ‘universal ex-post efficiency’, we identify the set of Rawls-optimal social contracts, which is shown to be a subset of Pareto-optimal ones.

Suggested Citation

  • Antonio Abatemarco & Francesca Stroffolini, 2023. "Optimal redistribution behind the veil of ignorance," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(3), pages 995-1024, October.
    • Handle: RePEc:spr:epolit:v:40:y:2023:i:3:d:10.1007_s40888-022-00290-8
    DOI: 10.1007/s40888-022-00290-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Social contract; Equity; Efficiency; Rawls;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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