A non parametric decomposition of redistribution into vertical and horizontal components

  1. Perrote Coste, Irene
  2. Salas del Mármol, Rafael
  3. Rodríguez Hernández, Juan Gabriel
Revista:
Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales

ISSN: 2255-5471

Any de publicació: 2001

Número: 7

Tipus: Document de treball

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Resum

We apply non-parametric methods to construct an index to measure horizontal inequity (HI). The index tackles the problem of arbitrary definition of similar individuals, and has important normative properties: HI is measured by the distance between the Lorenz curves of estimated and actual post-tax income distribution. This incorporates an ordinal view of HI. Moreover, the total effect of a tax system can be decomposed into welfare gain due to income redistribution free of HI and welfare loss due to HI. Indices such as in Aronson et al. (1994) and Lambert and Ramos (1997) can be seen as particular cases.

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