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Inequality, Mobility and Redistributive Taxation in a Finance-Constrained Economy

Ryo Arawatari and Tetsuo Ono ()

Applied Economics and Finance, 2015, vol. 2, issue 4, 143-159

Abstract: This paper presents a simple model that displays a joint determination of income inequality and intergenerational mobility affected by redistributive taxation. The model shows that a larger redistribution improves equality and utility and enhances mobility when the poor are financially constrained, however it creates a trade-off between the rich and the poor in terms of utility when the poor are financially unconstrained. The model also shows that the size of the redistribution as well as wage inequality play key roles in explaining the cross-country differences in inequality and mobility among OECD countries.

Keywords: inequality; Gini coefficient; intergenerational mobility; redistributive taxation; financial constraints (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2015
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Related works:
Working Paper: Inequality, Mobility and Redistributive Taxation in a Finance-constrained Economy (2009) Downloads
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