Departmental Bulletin Paper Should income inequality be praised? Multiple public goods provision, income distribution, and social welfare

Itaya, Jun-ichi  ,  Mizushima, Atsue

298pp.1 - 37 , 2016-01-26 , Graduate School of Economics and Business Administration, Hokkaido University
We investigate how income inequality affects social welfare in a model of voluntary contributions to multiple pure public goods. Itaya, de Meza, and Myles (1997) show that the maximization of social welfare precludes income equality in a single pure public good model. In contrast, we show that the result of Itaya et al. may not be valid in a case of multiple voluntarily supplied public goods; specifically, we show that not only an income inequality-raising redistribution policy but also an income-equalizing one may raise social welfare. We also show that if altruistically motivated voluntary transfers are allowed, an inequality-raising redistribution policy is no longer effective and leaves social welfare unchanged.

Number of accesses :  

Other information