Redistribution toward Low Incomes in Richer Countries

Abstract

This essay presents a critical overview of the findings of economic research on the problem of redistribution toward low incomes in developed countries. The discussion is organized as follows. The second section briefly describes the positive and empirical analysis (for which numerous good surveys are available) and focuses mostly on the normative analysis. The third section starts with a discussion of the optimal structure of cash transfer programs, then extends the analysis of optimal transfer programs along various new dimensions. The fourth section discusses how the results of the third section might be affected in situations where individuals may not be able to make the best choices for themselves. The fifth section provides a conclusion and an educated view on what should be done for redistribution toward low incomes.

On the peculiarity of class reproduction in the society of exchange and the popular subject of rising inequality in the United States

“…This perspective is intensely preoccupied with the fortunes of the top 1 percent and espouses the belief that rising inequality can be remedied with a reform of the system of taxes and transfers (e.g. Piketty, 2014;Saez, 2006). All these accounts share one common feature: they seek to determine the nature and causes of inequality through measurement via advanced statistical and formal methods.…”

Paradoxes of Social Policy

“…Scholars often explain the reluctance to support social policy in the United States as an interaction of racial prejudice and the targeting of welfare toward the “undeserving” poor (Katz 2001; Soss et al 2011; Wilson 1996). Even among economists advocating the efficiency of targeting, there has been little rebuttal to claims that targeting is unpopular, weakens redistribution preferences, and negatively feedbacks into politics (Blank 1997; Saez 2006; but see Sen 1995).…”

“…1982; Saez 2006). Counterintuitively, KP argue that the more countries target welfare transfers at the poor, the less poverty is reduced.…”

“…One of the most influential articles in social policy research is Korpi and Palme’s (1998) classic “The Paradox of Redistribution and Strategies of Equality.” Korpi and Palme (hereafter KP) investigate the salient question of whether social policies should be targeted at the poor or universally distributed to all. Many scholars claim that targeting efficiently concentrates scarce resources on the neediest and better aligns with poverty-reducing incentives like encouraging work (Besley 1990; Kakwani and Subbarao 2007; Le Grand 1982; Saez 2006). Counterintuitively, KP argue that the more countries target welfare transfers at the poor, the less poverty is reduced.…”

Social Transfers and Women's Labour Supply in Kyrgyzstan

“…hours of work, and at the extensive margin, i.e. labour force participation (Saez, 2006). A substantive literature is concerned with the effects of social transfers on labour supply incentives in high income countries (Moffitt, 2002).…”