The effect on inequality of changing one or two incomesReportar como inadecuado

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The Journal of Economic Inequality

, Volume 4, Issue 3, pp 253–277

First Online: 11 August 2006Received: 03 February 2005Accepted: 31 January 2006


We examine the effect on inequality of increasing one income, and show that for two wide classes of indices a benchmark income level or position exists, dividing upper from lower incomes, such that if a lower income is raised, inequality falls, and if an upper income is raised, inequality rises. We provide a condition on the inequality orderings implicit in two inequality indices under which the one has a lower benchmark than the other for all unequal income distributions. We go on to examine the effect on the same indices of simultaneously increasing one income and decreasing another higher up the distribution, deriving results which quantify the extent of the ‘bucket leak’ which can be tolerated without negating the beneficial inequality effect of the transfer. Our results have implications for the inequality and poverty impacts of different income growth patterns, and of redistributive programmes, leaky or not, which are briefly discussed.

Key wordsinequality index inequality ordering leaky bucket  Download to read the full article text

Autor: Peter J. Lambert - Giuseppe Lanza


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