Redistribution with needs

We take an axiomatic approach to study redistribution problems when agents report income and needs. We formalize axioms reflecting ethical and operational principles such as additivity, impartiality and individual rationality. Different combinations of those axioms characterize three focal rules (la...

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Bibliographic Details
Published in:Journal of public economic theory 2024-02, Vol.26 (1), p.n/a
Main Authors: Martínez, Ricardo, Moreno‐Ternero, Juan D.
Format: Article
Language:English
Subjects:
additivity
axioms
Economic theory
impartiality
needs
redistribution
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Summary:We take an axiomatic approach to study redistribution problems when agents report income and needs. We formalize axioms reflecting ethical and operational principles such as additivity, impartiality and individual rationality. Different combinations of those axioms characterize three focal rules (laissez faire, full redistribution, and need‐adjusted full redistribution) as well as compromises among them. We also uncover the structure of those compromises exploring the Lorenz dominance criterion as well as majority voting. Our analysis provides an axiomatic justification for a linear income tax system. We conclude our analysis resorting to Eurostat's Household Budget Survey from where we illustrate the different redistribution patterns accounting for needs across European countries.
ISSN:1097-3923
1467-9779
DOI:10.1111/jpet.12683