Reducing poverty and inequality through tax-benefit reform and the minimum wage: the UK as a case-study

Atkinson’s book Inequality: What Can Be Done? (Harvard University Press, 2015) sets out a range of concrete proposals aimed at reducing income inequality, which cover a very broad span but include major changes to the income tax and social transfers system and the minimum wage. These are framed with specific reference to the UK but have much broader relevance in demonstrating how substantial the impact on inequality of such measures could be. This paper assesses the first-round effects of these tax, transfer and minimum wage reforms on income inequality and poverty based on a microsimulation approach using EUROMOD. The reforms involve a significantly more progressive income tax structure, a major increase in the minimum wage to the level which is estimated to represent the ‘Living Wage’, and alternative routes to reforming social transfers – either to strengthen the social insurance element or to restructure the entire system as a Participation Income (a variant of Basic/Citizen’s Income). The results show how the first-round effects of either set of tax and transfer proposals would be to substantially reduce the extent of income inequality and relative income poverty and the paper draws out how the two approaches differ in their effects. The additional impact of raising the minimum wage to the Living Wage is modest, reflecting in particular the position of beneficiaries in the household income distribution and the offsetting effects on household income of the withdrawal of means-tested cash transfers.     

Second degree Pareto dominance

We present and discuss a binary relation aimed at the study of the re-distribution of income. We characterize, in a number of ways, the set of income allocations that can be reached from an initial allocation through a sequence of pair-wise equalizing transfers, where the sequence contains no flow of income from any donor to anyone else who ends up strictly richer than this donor himself ends up at the outcome of the entire sequence. Thanks are due to Peter Lambert and James Mirrlees for their comments. Thon was with the Department of Economics, University of Macau, when some of the work on this paper was done.     

The equity-efficiency trade-off reconsidered

Envy-free and Pareto optimal allocations never exist in large economies with production, if there is enough variation with respect to preferences and innate abilities of the agents. If distributional equity is given priority only second best envy-free allocations may be considered. Those allocations are characterised in finite and continuum economies. In continuum economies envy-free allocations are type-egalitarian, i.e. agents with the same preferences but different abilities obtain the same consumption-labour bundle. Regarding implementation envy-free allocations can only be implemented by a tax depending on labour and income.I would like to thank two anonymous referees and the editor in charge of this paper for very helpful comments.     

Implementation of the Walrasian correspondence without continuous,convex, and ordered preferences

This paper consideres the problem of designing better mechanisms whose Nash allocations coincide with constrained Walrasian allocations for non-neoclassical economies under the minimal possible assumptions. We show that no assumprions on preferences are needed for feasible and continuous implementation of the constrained Walraisan correspondence. Further, under the monotonicity assumption, we present a mechanism that is completely feasible and continuous. Hence, no continuity and convexity assumptions on preferences are required, and preferences may be nontotal or nontransitive. Thus, this paper gives a somewhat positive answer to the question raised in the literature by showing that, even for non-neoclassical economies, there are incentive-compatible, privacy preserving, and well-behaved mechanisms which yield Pareto-efficient and individually rational allocations at Nash equilibria.I wish to thank J. S. Chipman, J. Jordan, M. Richter, H. Weinberger, the editor, and two anonymous referees for useful comments and suggestions. I am particularly thankful to L. Hurwicz who stimulated my interest in this problem and provided detailed comments and suggestions.     

Parenting,discipline and the concept of quality time

Diminished time to rear children is a given for many parents in contemporary society. In informing time-constrained parenting, the concept of quality time has heuristic value. This paper argues that the failure to link quality time to a theory base capable of explaining both negative and positive behavior has misguided parent-child interactions. An availability sample is used to examine the extent to which negative behavior is still precluded in definitions of quality time. It locates the concept of quality time within the professional literature, linking it and the notion of discipline to psychodynamic theory.     

The direct social preference relation in the theory of public expenditure

It is shown that if there is a finite number of private goods, a single public good, and the individual preferences satisfy certain monotonicity and separability conditions then there is a unique and complete social preference relation defined on the set of allocations by the requirement that the relation is individualistic in terms of the individual ordinal preferences. This relation, called the direct social preference relation, is derived without imposing interpersonal welfare comparisons and all its ordinal properties are inherited directly from those of the individual preferences. However, an allocation which is maximal in terms of the direct social preference relation on the set of feasible allocations is in general not Pareto optimal and the relation may therefore not be suitable as a guide to optimizing social choice.This version of the paper has benefitted from J. Weymark's insightful and detailed comments. In addition, valuable suggestions have been received from G. C. Archibald, C. Blackorby, D. Donaldson and D. Primont. All remaining errors are the sole responsibility of the author     

A Cultural Perspective on the Study of Chinese Adolescent Development

This paper argues that the dominant Western construction of adolescent development which defines adolescence as an individuation process with the primary theme of developing an autonomous self is alien to the Chinese cultural system. In contrast to the Western conception of an autonomous self based on separation from others and self-other differentiation, the Chinese conception of self is more complicated. Based on the Chinese-West differences, the paper argues that the borrowed Western concept of self and the Western models do not appear to fit Chinese adolescents' experience. A concept of self-in-relational-network is therefore proposed for understanding the unique developmental processes and outcomes of Chinese adolescents.     

Optimal commodity taxation for reduction of envy

This paper derives optimal commodity taxes in a two-class economy based on -equitability. An allocation is -equitable if no agent envies a proportion of the bundle of any other agent. We examine the properties of Pareto undominated allocations in a class of -equitable allocations. We first show that the consistency between envy reduction and enhancement of the low-skilled agents utility depends on 1) the income elasticity of leisure 2) the degree of preference and skill differences. On the optimal tax rule, we can show the following. When the envy constraint is binding, ceteris paribus, the goods preferred by the low skilled agent and of high Hicksian elasticities are taxed more heavily. The optimal commodity tax is uniform if, in addition to weak separability, sub-utility of the goods is homothetic.     

Reflexivity,feminism and difference

This paper addresses the relation of feminist methodology to political commitments. Distinguishing between a weak and a strong reading of Reflexivity this paper argues that the former contains certain assumptions on the deconstruction of the authority of the author and/or of the power difference in field relations. These assumptions are identified and their often problematic nature analyzed. Based on the impact of the murder of a peace activist in Israel on the field relations between informants from Moroccan Jewish ethnicity and a woman ethnographer of Ashkenazi ethnicity, the paper argues that in cases of conflict regarding basic political orientation, differences between ethnographer and informants become marked. Thus difficulty with the reflexive stand does appear. While in cases of shared commonalities, where the commonality of a shared gender becomes marked, reflexivity is viewed as a method to promote a more ethical approach to social scientific research.     

The concept and measurement of asset poverty: Levels, trends and composition for the U.S., 1983–2001

American prosperity in the second half of the 1980s together with the booming economy of the 1990s created the impression that American households have done well, particularly in terms of wealth acquisition. In this paper, we develop the concept of asset poverty as a measure of economic hardship, distinct from and complementary to the more commonly used concept of income poverty. We define a household with insufficient assets to enable it to meet basic needs (as measured by the income poverty line) for a period of three months to be asset poor. The results reveal that in the face of the large growth in overall assets in the U.S. and a fall in standard income poverty over the period from 1983 to 2001, the level of asset poverty increased from 22.4 to 24.5 percent.We also find that asset poverty rates for blacks and Hispanics are over twice those for whites; that asset poverty rates fall monotonically with both age and education; that they are much higher for renters than homeowners; and that by family type they range from a low of 5 percent for elderly couples to 71 percent for female single parents.     

Social choice in economic environments with dimensional variation

An argument for welfarist social evaluation is presented that replaces the independence axiom with a consistency axiom for social-evaluation functionals in economic environments. This axiom (consistency across dimension or COAD) requires that, if two allocations contain suballocations in common, and if individual utility functions are projected down to the smaller economy where allocations change, then these small allocations must be ranked in the same way that their ancestral allocations were.The basic result is applied to different information environments and a variety of ethical axioms appropriate to economic environments is investigated.We are indebted to Charles Blackorby, Erwin Diewert, Ed Morey, Bill Schworm and John Weymark for helpful discussions, and to the Social Sciences and Humanities Research Council, the Killiam Foundation and the National Science Foundation, for research support.     

From Altruism to Action: Primary Task and the Not-for-Profit Organization

This paper examines the concept of primary task,as it has been used in action research and consultancyat The Tavistock Institute and elsewhere. It applies theconcept to the not-for-profit organization and argues that primary task should not bethought of opportunistically; it relates to themission of the organization. The threesector model of public, private and voluntaryorganizations is linked to basic assumptions, as described by Bion andapplied to societal institutions. The voluntary sectoris considered to have a valency for basic assumptionpairing organizational behavior. A case study of a voluntary organization demonstrates the waydifferent stakeholders claim psychological ownership ofthe enterprise. The paper concludes that the concept ofprimary task remains important, offering a stable reference point for working with organizations,where the boundary between sectors is increasinglyproblematic, threatening to overwhelm their originalpurpose.     

Labor Supply by Farm Operators Under “Decoupled” Farm Program Payments

As part of 1996 legislation, the U.S. began paying farmers production flexibility contract payments designed to be somewhat decoupled from current production decisions. In the labor-leisure model, decoupled payments would be expected to only have a wealth effect, but coupled payments would be expected to have both a substitution and a wealth effect. In this paper, the impacts of the decoupled payments and other government payments on both farm and off-farm labor allocations for farm operators are considered using data from the Agricultural Resource Management Survey (ARMS). Results indicate that government payments tend to increase the hours operators work on their farm and decrease the hours they work off the farm. This is true whether the payments come from programs which tie payments to current year production, or not.JEL Classification: D13, J22, Q12, Q22The authors are agricultural economists with the Economic Research Service (USDA). The views expressed here do not necessarily represent the views of the U.S. Department of Agriculture.     

VOTING FOR INCOME‐IMMISERIZING REDISTRIBUTION IN THE MELTZER–RICHARD MODEL

This paper argues that income received via redistributive transfers, unlike labor income, requires no direct sacrifice of leisure; this makes it attractive to many voters even if it leaves them poorer. This point is made within the classic Meltzer and Richard (1981) model wherein heterogeneous voters evaluate an income‐redistribution program that finances a lump‐sum transfer to all via a distorting income tax. The political‐equilibrium policy under majority rule is the tax most preferred, utility‐wise, by the median voter. Ironically, this voter, and many poorer voters, may support a redistribution policy that leaves them poorer in income terms but with higher utility. (JEL H2, E6, D72)     

A derivation of the money Rawlsian solution

We study the set of envy-free allocations for economies with indivisible objects and quasi-linear utility functions. We characterize the minimal amount of money necessary for its nonemptiness when negative distributions of money are not allowed. We also find that, when this is precisely the available amount of money, there is a unique way to combine objects and money such that these bundles may form an envy-free allocation. Based on this property, we describe a solution to the envy-free selection problem following a pseudo-egalitarian criterion. This solution coincides with the Money Rawlsian Solution proposed by Alkan et al. (1991).I am indebted to I. Gilboa for his valuable suggestions and his patience during the elaboration of the final version. I also wish to thank S. Barbera for his guidance in an earlier version and M. Boldrin, H. Moulin, Z. Neeman, W. Thomson and the referees for their comments. Financial support from FPU-MEC (Spain) is gratefully acknowledged.Northwestern University.     

Progressive taxation and redistributive taxation: Different labels for the same product?

The paper examines different approaches to measure tax progressivity. In particular the distributional aspect of taxation is considered in some depth. For each member of a parametric class of inequality concepts, including more than only the relative and the absolute view of inequality, a necessary and sufficient condition for a tax function to be inequality reducing with respect to this concept for all admissible pre-tax income distributions is derived, both in strong and weak form. Only three very natural properties are required to prove this result: each tax liability is less than the corresponding pre-tax income, taxation does not reverse ranks on the income scale, and inequality is reduced if a rich gives to a poor such that they do not interchange their ranks. A definition of tax progressivity based on the shown equivalence is suggested. It is demonstrated that inequality reducing taxation is equivalent to progressive taxation in the sense of an increasing average tax rate if and only if the concept of relative inequality is used.An early version of this paper was presented at the seminar on Distributive Justice and Inequality at the Wissenschaftskolleg, Berlin, May 20–24, 1986. Some of the material contained previously circulated under the heading Generalized concepts of tax progression and inequality reduction.The author is indebted to Peter Lambert whose survey of tax progressivity inspired the present analysis incredibly. James Foster, John Weymark, and two anonymous referees provided helpful comments. Remaining errors and omissions are all mine.     

Lived Experience and Interpretation in Narrative Theory: Experiences of Living with HIV/AIDS

Narrative analysis builds on the strengths of qualitative research by examining the construction of meaning and symbolic systems in a framework that is explicitly temporal and that links research in the humanities with that in the social sciences. Qualitative methodologies often assume reported data accurately reflects the realities of lived experience. On the other hand some research drawing on cultural studies argues that the facts of a person's life are irrelevant. This paper argues for a middle way based on narrative theory that explores the interaction of objective events and their subjective interpretation. Further, narrative analysis enables exploration of the temporal structure of people's experiences focusing on both how a person's memories of the past and anticipations of the future influence their understanding and actions in the present. These points are developed drawing on the theory and methodology of both Symbolic Interactionism and Paul Ricoeur's Hermeneutics. The experiences of people living with HIV/AIDS are used to illustrate and explicate the usefulness of narrative analysis.     

Global Complexity and Global Civil Society

This paper argues that recent struggles against neoliberal axioms such as free trade and open markets have led to a militant reframing of global civil society by grassroots social movements. It contests that this struggle to invest the concept of global civil society with transformative potential rests upon an identifiable praxis, a strange attractor that disturbs other civil society actors, through its re-articulation of a politics that privileges self-organization, direct action, and direct democracy. The paper further suggests that the emergence of this antagonistic orientation is best understood through the lens of complexity theory and offers some conceptual tools to begin the process of analyzing global civil society as an outcome and effect of global complexity.     

Ethnography as Translation

Sociologists and anthropologists often struggle over how to accurately convey ethnographic data from the field setting to a final report. This paper examines ethnography as a form of translation in order to clarify what occurs between the acquisition of data and the formulation of a thesis about the data. The paper argues that the ethnographers mind should be seen as a transitional space which in the act of translating field data into an analytic report (1) poses unique challenges to ethnographys claims for providing an accurate account of field situations while (2) simultaneously offering paths to insight which quantitative and survey research can not.     

Innocence, Perversion, and Heather's Two Mommies

This paper begins by untangling the twisted threads linking homosexuality and childhood in the mind of America, and explaining how contemporary constructions of homosexuality have become entwined with modern conceptions of childhood. The author draws on the literature on the invention of childhood and especially the pioneering work of Jonathan Silin to show how the entrenchment of capitalism and arrival of compulsory schooling have created a hegemonic form of family and produced a child at once innocent and ignorant. The author then probes the construction of the homosexual in the late 19th century and uncovers interconnections between this new social typology and representations of childhood. By examining how these linkages are historically embodied in incidents of sex panic, the author argues that the psyches of lesbians and gay men who are in relationship with children (as parents, teachers, coaches . . .) are often suffused with anxiety and self-doubt. Hence a gay movement emerges rife with hyper-traditional representations of children and youth. Contemporary queer representations of childhood are then explored through a focus on children's books designed for the offspring of lesbian and gay parents. The author suggests that contemporary gay advocacy, which attempts to dislodge perversion as the central representation of homosexuality, will be unsuccessful until activists abandon tactics that infantilize children and perpetuate a vision of childhood as vulnerable, innocent, and unknowing.