The Income Lever and the Allocation of Aid

Lidia Ceriani () and Paolo Verme

No 286, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: The paper develops a concept and a measure of the monetary capacity of a country to reduce its own poverty and shows how these tools can be used to guide budget allocations or the distribution of Aid. We call this concept the income lever and define it as the relation between the welfare of the poor and the welfare of the non-poor in a given society. Making use of tax and distributive theory, the paper shows how to different redistributive criteria correspond different normative criteria of income lever. We then construct various income lever indexes based on these criteria and use such indexes to rank countries according to their own monetary poverty reduction capacity. As shown in the empirical application, this methodology can provide an equitable tool to rank countries or regions when it comes to budget or Aid allocations, whether it is the allocation of social funds within the European Union (North-North transfers) or the allocation of Aid from rich to poor countries (North-South transfers).

Keywords: Aid distribution; poverty reduction; redistribution policies. (search for similar items in EconPapers)
JEL-codes: F3 H2 H5 I3 O1 O2 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-01
New Economics Papers: this item is included in nep-dev
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http://www.ecineq.org/milano/WP/ECINEQ2013-286.pdf (application/pdf)

Related works:
Journal Article: The Income Lever and the Allocation of Aid (2014)
Working Paper: The income lever and the allocation of aid (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2013-286

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