On Comparing Heterogenous Populations: Is There Really a Conflict between the Pareto Criterion and Inequality Aversion?
نویسندگان
چکیده
The incompatibility between the Pareto indifference criterion and a concern for greater equality in living standards of heterogenous populations (see, amongst others, Ebert, 1995, 1997, Ebert and Moyes, 2003 and Shorrocks, 1995) might come as a surprise, since both principles are reconcilable when people differ only in income (homogenous population). We present two families of welfare rankings –(i) single parameter extensions of the generalized Lorenz dominance rule and (ii) a subset of Weymark’s (1981) generalized Ginis– and show how and why these rules resolve the paradox. JEL classification: D31, D63, I31.
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