INEQUALITY WITHIN AND AMONG NATIONS

Michael Lovell

No 1998-001, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: This paper looks at both within country and among country inequality. In the spirit of Dalton[1920] and Atkinson[1970] this paper reports estimates of the welfare loss arising from inequality. The paper also explores the implications of Duesenberry style interdependent utility functions when a Utilitariansocial welfare function is employed and evaluates the appropriateness of the Gini coefficient and the coefficient of variation as possible measures of “depression” or “relative deprivation.” The paper reports a variety of measures of inequality for the 82 countries for which comparable data are available from the 1996 World Development Report. In 18% of the pair-wise comparisons of inequality in different countries the situation is ambiguous in the sense that neither country Lorenz dominates the other. Shorrocks[1982] Generalized Lorenz curves leave ambiguous 16% of paired welfare comparisons. By a wide variety of alternative measures, inequality among nations is much greater than inequality within countries. The data generated a surprising empirical result: for any utility function satisfying Dalton’s Principle of Transfers, the loss of welfare arising from within country inequality is approximately 40% of the loss caused by inequality among nations.

Keywords: Inequality; Income Distribution; Gini Coefficient; Relative Deprivation; Lorenz Dominance; Generalized Lorenz Curve; Veil of Ignorance; Equally Distributed Equivalent Income; Interdependent utilities; Tax price of public goods (search for similar items in EconPapers)
JEL-codes: D31 P5 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1998-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Income Distribution,(1), 1998

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http://repec.wesleyan.edu/pdf/mlovell/1998001_lovell.pdf (application/pdf)

Related works:
Journal Article: Inequality Within and Among Nations (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:wes:weswpa:1998-001

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