Classical Horizontal Inequity and Reranking: an Integrated Approach

Jean-Yves Duclos, Vincent Jalbert and Abdelkrim Araar

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: The last 20 years have seen a significant evolution in the literature on horizontal inequity (HI) and have generated two major and "rival" methodological strands, namely, classical HI and reranking. We propose in this paper a class of ethically flexible tools that integrate these two strands. This is achieved using a measure of inequality that merges the well-known Gini coefficient and Atkinson indices, and that allows a decomposition of the total redistributive effect of taxes and transfers in a vertical equity effect and a loss of redistribution due to either classical HI or reranking. An inequality-change approach and a money-metric cost-of-inequality approach are developed. The latter approach makes aggregate classical HI decomposable across groups. As in recent work, equals are identified through a nonparametric estimation of the joint density of gross and net incomes. An illustration using Canadian data from 1981 to 1994 shows a substantial, and increasing, robust erosion of redistribution attributable both to classical HI and to reranking, but does not reveal which of reranking or classical HI is more important since this requires a judgement that is fundamentally normative in nature.

Keywords: Horizontal inequity; reranking; tax equity; inequality; Canadian tax system. (search for similar items in EconPapers)
JEL-codes: C14 D31 D63 H23 (search for similar items in EconPapers)
Pages: 37
Date: 2001-01-24
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://pareto.uab.es/wp/2001/47801.pdf (application/pdf)

Related works:
Working Paper: Classical Horizontal Inequity and Reranking: an Integrated Approach (2000)
Working Paper: Classical Horizontal Inequity and Reranking: an Integrated Approach (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:478.01

Access Statistics for this paper

More papers in UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) Contact information at EDIRC.
Bibliographic data for series maintained by Xavier Vila ().