A multi-factor inequality approach to a transfer scheme: the case of Common Agricultural Policy

Arsen Palestini () and Giuseppe Pignataro

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The purpose of this paper is to propose theoretical foundations on the impact of transfer scheme, e.g. Community Agricultural Policy, on income inequality within European Countries. First, we show that ex-post inequality (in the after-transfer distribution) may increase if either initial aggregate income or the amount of fiscal contributions are sufficiently high. Second according to welfare ordering, we characterize a multi-factor decomposition of the Atkinson index to gauge the impact of each income source on the inequality profile. Third, we introduce a methodology to construct a cooperative game played by different income factors (as net incomes and/or incoming transfers) explicitly measuring the cost of inequality across the population in terms of welfare loss. We finally rely on Banzhaf and Shapley values to determine the marginal contributions of each factor to overall inequality.

JEL-codes: D31 D63 I32 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-agr, nep-eur and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp891

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