Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146177
Authors: 
Voigts, Simon
Year of Publication: 
2016
Series/Report no.: 
SFB 649 Discussion Paper 2016-008
Abstract: 
Given that well-being is a concave function of income, inequality is inefficient from a utilitarian perspective. This paper proposes a way to express the utilitarian benefit from redistributive reforms in terms of out- put, i.e. as a share of GDP. Three applications are presented: First, in nine European countries under study, a mild increase in government redis- tribution allows for gains in well-being equivalent to 8.9%-20.2% of higher GDP, and 55.8% for the US. Second, in the US, redistributing income in excess of the level at the 99th percentile is as beneficial as a 39.5% GDP-increment. Third, revoking government redistribution in Germany reduces welfare by the same amount as a 25.4% decline in output.
Subjects: 
Income Distribution
Inequality
JEL: 
D31
D63
Document Type: 
Working Paper

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