Should income inequality be praised? Multiple public goods provision, income distribution, and social welfare

Jun-ichi Itaya () and Atsue Mizushima

No 298, Discussion paper series. A from Graduate School of Economics and Business Administration, Hokkaido University

Abstract: We investigate how income inequality affects social welfare in a model of voluntary contributions to multiple pure public goods. Itaya, de Meza, and Myles (1997) show that the maximization of social welfare precludes income equality in a single pure public good model. In contrast, we show that the result of Itaya et al. may not be valid in a case of multiple voluntarily supplied public goods; specifically, we show that not only an income inequality-raising redistribution policy but also an income-equalizing one may raise social welfare. We also show that if altruistically motivated voluntary transfers are allowed, an inequality-raising redistribution policy is no longer effective and leaves social welfare unchanged.

Keywords: Public goods; Inequality; Social welfare; Voluntary provision; Income distribution (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016-01-26
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http://hdl.handle.net/2115/60614 (text/html)
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Related works:
Working Paper: Should Income Inequality be Praised? Multiple Public Goods Provision, Income Distribution and Social Welfare (2016)
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