Income Inequality and Poverty

Martin Feldstein

No 6770, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The first part of this paper argues that income inequality is not a problem in need of remedy. The common practice of interpreting a rise in the gini coefficient measure of inequality as a bad thing violates the Pareto principle and is equivalent to using a social welfare function that puts negative weight on increases in the income of high income individuals. The real distributional problem is not inequality but poverty. The paper considers three sources of poverty and asks what if anything might be done about each of them: unemployment; a low level of earning capacity; and individual choice.

JEL-codes: D3 J3 (search for similar items in EconPapers)
Date: 1998-10
New Economics Papers: this item is included in nep-mic, nep-pbe and nep-pub
Note: PE
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Citations: View citations in EconPapers (20)

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