TY  - JOUR
AU  - King,Mervyn A.
TI  - An Index of Inequality: With Applications to Horizontal Equity and Social Mobility
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 468
PY  - 1983
Y2  - March 1983
UR  - http://www.nber.org/papers/w0468
L1  - http://www.nber.org/papers/w0468.pdf
N1  - Author contact info:
Mervyn A. King
Governor
Bank of England
Threadneedle Street
London EC2R 8AH
 UNITED KINGDOM
Tel: 44-20-7601-4963
Fax: 44-20-7601-4953
E-Mail: mervyn.king@bankofengland.co.uk
AB  - An index of Inequality is constructed which decomposes into two components, corresponding to vertical and "horizontal" equity respectively. Horizontal equity Is defined in terms of changes in the ordering of a distribution. The proposed index is a function to two inequality aversion parameters. One empirical application is for comparison of a pre-tax distribution with a post-tax distribution, and an example of this is given for the distribution of incomes in the UK in 1977. There is a trade-off between "horizontal"and vertical equity, and for particular combinations of the inequality aversion parameters the original distribution will be preferred to the final distribution. The paper concludes with an application of the proposed index to a model of optimal taxation.
ER  -