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Remittances, Lorenz Dominance in the Distribution of Income and Redistribution

Raul Ponce Rodriguez () and Ikuho Kochi ()

Review of Economics and Institutions, 2017, vol. 8, issue 1

Abstract: We analyze how changes in the distribution of income, characterized by the comparison of Lorenz curves, affect public redistribution for an economy with international interfamily transfers (remittances). Our analysis suggests that a fall in the inequality of income might increase or reduce the government’s ability to collect tax revenue and its electoral costs from inefficient taxation which in turn affect public redistribution. The main contribution of this paper is to characterize conditions in which a shift towards a dominant Lorenz curve can lead to an increase or fall in public redistribution. We also find that the composition of a change in the distribution of income, promoted by a change in the distribution of labor income or remittances, leads to different effects on the size of public redistribution.

Keywords: remittances; redistribution; political competition; Lorenz curves (search for similar items in EconPapers)
JEL-codes: F24 H23 D63 D72 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:pia:review:v:8:y:2017:i:1:n:1