Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325103 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18045
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We specify the domain in the income distribution that includes the people to whom income transfers will not increase inequality in that income distribution. Inspired by Sen's (1973, 1997) characterization of the Gini coefficient as a ratio between a measure of aggregate income-based "depression" (stress) and aggregate income, we inquire as to whether in the wake of an increase of an income or of incomes in a given income distribution, the Gini coefficient does not increase. To this end, we identify the corresponding "safe" domain and show that the pivotal value that demarcates this domain can be elicited from a simple linear function of the Gini coefficient itself. Our rule of demarcation provides for policy interventions that seek to increase a particular income or particular incomes while not exacerbating inequality in the income distribution as measured by the Gini coefficient.
Subjects: 
Gini coefficient
aggregate income-based stress
aggregate income
rank-preserving increase of an income or incomes
pivotal value
sufficient condition for the Gini coefficient not to increase
JEL: 
C43
D31
D63
H11
H53
I31
I38
P46
Document Type: 
Working Paper

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