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Measuring Progressivity and Inequality

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  • DUCLOS, Jean-Yves
Abstract
A general class of progressivity indices is proposed which is consistent with the well-developed theory of the measurement of inequality and social welfare. In particular, we show that the more progressive a tax system, the more equal the distribution of net income and the greater the progressivity index. For an additive social welfare function and a progressive tax system, the greater the degree of relative inequality aversion, the greater the progressivity index. We also discuss the link between inequality of gross income and tax progressivity. A by-product is the derivation of a general class of inequality measures that are invariant to equi-proportionate changes in incomes. We illustrate the analysis using the British tax and benefit system.

Suggested Citation

  • DUCLOS, Jean-Yves, 1995. "Measuring Progressivity and Inequality," Cahiers de recherche 9525, Université Laval - Département d'économique.
    • Handle: RePEc:lvl:laeccr:9525
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    References listed on IDEAS

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    1. Duclos, Jean-Yves, 1995. "Assessing the Performance of an Income Tax," Bulletin of Economic Research, Wiley Blackwell, vol. 47(2), pages 115-126, April.
    2. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
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    13. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    14. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-628, October.
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    17. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
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    Cited by:

    1. Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2000. "Classical Horizontal Inequity and Reranking: an Integrated Approach," Cahiers de recherche 0002, Université Laval - Département d'économique.
    2. Duclos, Jean-Yves & Jalbert, Vincent & Araar, Abdelkrim, 2003. "Classical Horizontal Inequity and Reranking: an Integrating Approach," Cahiers de recherche 0306, CIRPEE.

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    More about this item

    Keywords

    Progressivity; redistribution; inequality; social welfare;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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