Arbeitspapier

Inequality and Welfare Evaluation of Heterogeneous Income Distributions

This paper establishes the principles which should govern the welfare and inequality analysis of heterogeneous income distributions. Two basic criteria - the 'equity preference' condition and the 'compensation principle' - are shown to be fundamentally incompatible. The paper favours the latter, thereby vindicating the traditional method of dealing with heterogeneous samples. However, inequality and welfare comparisons will usually be well defined only if equivalent incomes are obtained using constant scale factors; and researchers will need to distinguish clearly between inequality of nominal incomes and inequality of living standards. Furthermore, household observations must always be weighted according to family size.

Language
Englisch

Bibliographic citation
Series: WIDER Research Paper ; No. 2004/01

Classification
Wirtschaft
Subject
income distribution
inequality
living standards
needs

Event
Geistige Schöpfung
(who)
Shorrocks, Anthony
Event
Veröffentlichung
(who)
The United Nations University World Institute for Development Economics Research (UNU-WIDER)
(where)
Helsinki
(when)
2004

Handle
Last update
20.09.2024, 8:20 AM CEST

Data provider

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Object type

  • Arbeitspapier

Associated

  • Shorrocks, Anthony
  • The United Nations University World Institute for Development Economics Research (UNU-WIDER)

Time of origin

  • 2004

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