A Normative and Statistical Approach to Measuring Classical Horizontal Inequity

Duclos, Jean-Yves; Lambert, Peter J.

doi:10.2139/ssrn.166931

A Normative and Statistical Approach to Measuring Classical Horizontal Inequity

34 Pages Posted: 12 Jul 1999

See all articles by Jean-Yves Duclos

Jean-Yves Duclos

Laval University; IZA Institute of Labor Economics

Peter J. Lambert

University of Oregon - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: February 1999

Abstract

A local measure of classical horizontal inequity (HI) in an income tax or tax-benefit system is proposed and aggregated into a global index. This index expresses the revenue gain per capita that would come from eliminating HI welfare-neutrally, and also reveals the loss of vertical performance, in terms of the Blackorby and Donaldson (1984) progressivity index, caused by the presence of HI. Non-parametric estimation procedures are delineated which can be used to tackle the 'identification problem'. An application to the Canadian tax-benefit system between 1981 and 1994 reveals the changing profile of local HI, its sources and its aggregate significance.

JEL Classification: C14, D31, D63, H23

Suggested Citation: Suggested Citation

Duclos, Jean-Yves and Lambert, Peter J., A Normative and Statistical Approach to Measuring Classical Horizontal Inequity (February 1999). Available at SSRN: https://ssrn.com/abstract=166931 or http://dx.doi.org/10.2139/ssrn.166931