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The Struggle Between Equity and Efficiency: Do Nordic Countries Have a Free Lunch?

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  • Alexander Brunner
  • Norbert Berthold

Abstract

Although there is a vast theoretical literature on the existence of a tradeoff between equity and efficiency, empirical investigations often fail to find evidence for this proposition. Furthermore there are hints that some social models in Europe can cope better with this trade-off and are actually able to provide what economists call a ""free lunch"". In this paper we use data from the Luxembourg Income Studies (LIS) to evaluate (a) whether there really exists something like a free lunch and (b) whether some social systems are actually better in coping with the trade-off between equity and efficiency.

Suggested Citation

  • Alexander Brunner & Norbert Berthold, 2008. "The Struggle Between Equity and Efficiency: Do Nordic Countries Have a Free Lunch?," LIS Working papers 498, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:498
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    More about this item

    Keywords

    equity; efficiency; tradeoff; welfare states;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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