Transfer and Distribution Approximation

Thomas Kämpke and Franz Josef Radermacher
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Thomas Kämpke: Research Institute for Applied Knowledge Processing (FAW/n)
Franz Josef Radermacher: University of Ulm

Chapter Chapter 5 in Income Modeling and Balancing, 2015, pp 83-94 from Springer

Abstract: Abstract Pigou–Dalton transfers carry over to complex income distributions under convergence in distribution and, thus, make these complex distributions comparable. While finite sequences of Pigou–Dalton transfers amount to majorization, convergence results extend these to the convex stochastic order for distributions with equal means. Thus, the larger of any two such distributions can be decreased to the smaller by Pigou–Dalton transfers and a limiting process. Alternatively, the same result can be obtained by probabilistic, more comprehensive Pigou–Dalton transfers, allowing a simpler approximation. Also, absolute and progressive taxation are shown to decrease in the Lorenz order any Lorenz curve of a finite income distribution.

Keywords: Taxation Rate; Lorenz Curve; Support Point; Discontinuity Point; Natural Vector (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-319-13224-2_5

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DOI: 10.1007/978-3-319-13224-2_5

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