Optimal redistribution behind the veil of ignorance

Antonio Abatemarco and Francesca Stroffolini ()
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Francesca Stroffolini: University of Napoli “Federico II”

Economia Politica: Journal of Analytical and Institutional Economics, 2023, vol. 40, issue 3, No 11, 995-1024

Abstract: Abstract We propose a formalization of the Difference Principle (maximin) by which Rawls’ contribution is shown to go beyond distributive value judgments in such a way as to embrace efficiency issues as well. In our model, inequalities are shown to be permitted as far as they stimulate a greater effort in education (or training), and so economic growth. This is the only possibility for an income disparity to be unanimously accepted by both the most-, and above all, the least-advantaged individual. In this vein, we highlight the peculiarity of the Rawlsian equity-efficiency trade off behind the veil of ignorance. Finally, by recalling the old tradition of ‘universal ex-post efficiency’, we identify the set of Rawls-optimal social contracts, which is shown to be a subset of Pareto-optimal ones.

Keywords: Social contract; Equity; Efficiency; Rawls (search for similar items in EconPapers)
JEL-codes: D31 D63 J31 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40888-022-00290-8

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