Is it Fair to ‘Make Work Pay’?

The writers propose a new fair allocation, labeled a “Pareto-efficient and shared resources equivalent” allocation. They explain that, as the name implies, the optimal allocation is Pareto-efficient and all individuals are indifferent between their bundle and what they would receive if it were phys...

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Publicado en:Economica Vol. 74; pp. 599 - 627
Autores principales: Luttens, Roland Iwan, Ooghe, Erwin
Formato: Artículo
Publicado: Wiley-Blackwell November 2007
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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          Luttens, Roland Iwan
          Ooghe, Erwin
      su:
        Welfare economics
        Social order
        Resource allocation -- Mathematical models
        Income tax
      sug:
        subj:
          Welfare economics
          Social order
          Resource allocation -- Mathematical models
          Income tax
      ab: The writers propose a new fair allocation, labeled a “Pareto-efficient and shared resources equivalent” allocation. They explain that, as the name implies, the optimal allocation is Pareto-efficient and all individuals are indifferent between their bundle and what they would receive if it were physically possible to divide or share all resources. They examine a discrete Stiglitz economy with four types—defined by a low or high productive skill and low or high taste for working—and a government that seeks to introduce fair taxes but cannot see individuals' type. They demonstrate that a fair system would subsidize low earners, as long as low-skilled individuals have a strictly positive skill. Using a sample of Belgian singles, they also suggest that negative marginal tax rates, and therefore “making work pay” policies, are not optimal in a reasonable case where at least some unemployed people are willing to work but are prevented by exogenous labor market constraints.
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    language: English
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