By PierCarlo Nicola
Increasing potency in producing nationwide source of revenue and enhancing fairness in its distribution between monetary brokers is on the vanguard of priorities of most up-to-date economies. This e-book offers a version which goals to maximise a symmetrical welfare functionality lower than yes constraints which think about either potency and fairness, i.e. taxes and subsidies, applied by means of a public authority. The version is numerically carried out and considers a collection of monetary brokers with beginning earning that fulfill Pareto source of revenue legislation lower than numerous values of the alpha parameter. additionally, the version implementations admire the social creation functionality. a number of experiments are provided which convey how source of revenue inequality (measured through the Lorenz curve and, what I name, the Lorenz-Gini inequality index) and measures of poverty are sensibly diminished by way of redistributing nationwide source of revenue with no decreasing potency in construction. A case learn, or program, of Italian own source of revenue in 2008 is additionally presented.
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Extra resources for Efficiency and Equity in Welfare Economics
How can j s be interpreted in economic terms? They can be viewed as an increment or a decrease in individual marginal utilities, whose values change from economic agent to economic agent. Because the j s may vary from agent to agent, it is impossible to say something specific on the relative value of the individual marginal welfare of the various economic agents. 1) of Chap. j D 1; 2; : : : ; m/, we cannot derive any definite conclusion on the comparisons among individual marginal welfare values, because economic agents can differ in their capacity to contribute to social production.
19 To substantiate this statement, suppose that ymin denotes the minimum income, below which a person is classified as poor, and let’s consider the outcome in two different economies. 17 For a critical discussion about the sensitivity of this index on the choice of ˛, see Tungodden (2005). 18 For instance, the value D 2=3 could be an appropriate weight, giving the poverty index twice the weight assigned to the inequality index. 19 According to Kakwani (1999, p. y/ D 0. y/ D 0. y/ D 1. y/ D 1 is impossible, if m > 1.
J 2 M1 /, and thus the marginal social welfare of every economic agent j 2 M1 is smaller than the marginal social welfare of every economic agent j 2 M2 . 16), state that the marginal social productivities for all economic agents j 2 M1 , are greater than the same marginal productivities for agents j 2 M2 . This can be summarized by means of Theorem E. 8) have smaller marginal social welfare and greater marginal social productivity than all of the non-constrained economic agents put together. 8) are compelled to make a social donation to all other agents.
Efficiency and Equity in Welfare Economics by PierCarlo Nicola