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Characterizing inequality benchmark incomes

Author

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  • Laurence S. J. Roope

    (University of Oxford)

Abstract

Many inequality measures have the property that for any income distribution there exists a benchmark income, above which adding incremental income increases inequality, and below which it decreases inequality. This note provides social preference conditions which guarantee the existence of such a benchmark income. The key condition is a strong version of the Pigou–Dalton transfer principle. The results imply that benchmark incomes exist for virtually all known inequality measures.

Suggested Citation

  • Laurence S. J. Roope, 2019. "Characterizing inequality benchmark incomes," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(1), pages 131-145, May.
    • Handle: RePEc:spr:etbull:v:7:y:2019:i:1:d:10.1007_s40505-018-0148-5
    DOI: 10.1007/s40505-018-0148-5
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    References listed on IDEAS

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    1. Alejandro Corvalan, 2014. "The Impact of a Marginal Subsidy on Gini Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 596-603, September.
    2. Hoffmann, Rodolfo, 2001. "Effect of the rise of a person's income on inequality," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 21(2), November.
    3. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    4. Peter Lambert & Giuseppe Lanza, 2006. "The effect on inequality of changing one or two incomes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 253-277, December.
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    Cited by:

    1. Heidorn, Thomas & Schäfer, Niklas, 2020. "Euro-Benchmarkreform - Neue Referenzzinssätze in der Eurozone," Frankfurt School - Working Paper Series 228, Frankfurt School of Finance and Management.
    2. Laurence S J Roope, 2021. "First estimates of inequality benchmark incomes for a range of countries," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-8, March.

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    More about this item

    Keywords

    Inequality; Inequality measurement; Benchmark income; Transfer principle;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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