Inequality-Minimization with a Given Public Budget

Aufsätze referiert extern - Web of Science 4 / 2018

Johannes König, Carsten Schröder

In: Journal of Economic Inequality 16 (2018), 4, S. 607-629

Abstract

We solve the problem of a social planner who seeks to minimize inequality via transfers with a fixed public budget in a distribution of exogenously given incomes. The appropriate solution method depends on the objective function: If it is convex, it can be solved by an interior-point algorithm. If it is quasiconvex, the bisection method can be used. Using artificial and real-world data, we implement the procedures and show that the optimal transfer scheme need not comply with a transfer scheme that perfectly equalizes incomes at the bottom of the distribution.

Johannes König

Wissenschaftlicher Mitarbeiter in der Infrastruktureinrichtung Sozio-oekonomisches Panel

Carsten Schröder

Vize-Direktor SOEP und Bereichsleitung Angewandte Panelanalysen in der Infrastruktureinrichtung Sozio-oekonomisches Panel



Keywords: Redistribution, Public transfers, Inequality, Optimization methods, Interior-point algorithm, Bisection method
DOI:
https://doi.org/10.1007/s10888-018-9380-3
Supplementary material (PDF 314 KB)
https://static-content.springer.com/esm/art%3A10.1007%2Fs10888-018-9380-3/MediaObjects/10888_2018_9380_MOESM1_ESM.pdf