Oslo Summer School in Comparative Social Science Studies 2008

Inequality, Welfare and Redistribution

Lecturer: Professor Peter J. Lambert,
Department of Economics,
University of Oregon, USA

Main disciplines: Economics, Sociology

Dates: 28 July - 1 August 2008
Course Credits: 10 pts (ECTS)
Limitation: 30 participants

In this short course, ideally suited to Ph.D. students and interested faculty, I will examine the measurement theory and inherent value judgements used to make inequality, welfare and poverty comparisons of income distributions, and to assess the extent and nature of redistribution which is implicit or explicit in an income tax system. The course draws on recent literature from the distinct traditions of welfare economics, social policy analysis and public finance, using a consistent approach. By the end, participants will be able to read widely in a quite specialist measurement literature, and know enough to structure and undertake advanced empirical investigations into distributional questions.

The course will be taught over 5 days by means of two daily 1½-hour meetings. The lectures will be delivered using OHP slides containing the material that will also be given to the participants as printed handouts. The course text will be Lambert, P.J. (2001) The Distribution and Redistribution of Income (3rd edition), Manchester University Press. The lecture outline is as follows, including reference to the chapters/sections of the course text that will be covered in each lecture.

Essential Book to Purchase and Read

Other Books: recommended preparation for the course

Complete Lecture Outline


Lecture 1: fundamentals
Income and wealth. The income unit: individual, household, tax unit. Differences in needs. Comparing income distributions.

Wider readings:

Next Lecture: Lambert §2.3, §2.4, §2.5

Lecture 2: inequality and the Lorenz curve
Inequality and its depiction using the Lorenz curve. Perfect equality: to be desired?

Wider readings:

Next Lecture: Lambert §3.1, §3.2, §3.3, §4.1


Lecture 3: Lorenz and generalized Lorenz dominance
Social welfare functions and the Atkinson theorem. The veil of ignorance, social decision-making and mathematical social choice theory. Generalized Lorenz dominance and the Shorrocks theorem. Inequality aversion.

Wider readings:

Next Lecture: Lambert §3.4, §3.5, §3.6

Lecture 4: generalized Lorenz intersections and differences in needs
The principle of diminishing transfers and intersecting generalized Lorenz curves. Poverty comparisons. Differences in need, equivalence scales and sequential dominance.

Wider readings:

Next Lecture: Lambert §5.1, §5.2


Lecture 5: inequality and welfare indices
Inequality indices: descriptive or prescriptive? Altruism, deprivation and the Gini coefficient. The extended Gini coefficient: a distributional judgement parameter.

Wider readings:

Next Lecture: Lambert §5.3, §5.4

Lecture 6: extended Gini and Atkinson inequality indices
Equally distributed equivalent income and the cost of inequality. The Atkinson index: comparing LDCs with advanced countries. Ethical problems.

Wider readings:

Next Lecture: Lambert §8.1, §8.2, 7.1, §8.3, §8.4


Lecture 7: poverty
Who is poor and how poor. Links between poverty, inequality and welfare. Poverty indices, poverty dominance. Differences in need and sequential poverty dominance criteria.

Wider readings:

Next Lecture: Lambert (1993) §6, §7.1, §7.2

Lecture 8: a progressive income tax schedule
Income taxation, redistributive effect and progressivity

Wider readings:

Next Lecture: Lambert §7.2, §7.3, §10.1, §10.2, §10.3


Lecture 9: real-world income taxes: horizontal and vertical equity
Differences in income tax treatment: horizontal equity and reranking.

Wider readings:

Next Lecture: No relevant material in Lambert (2001)

Lecture 10: extensions
Intertemporal redistribution; welfare-improving commodity tax reform.

Wider readings:

Complete Syllabus Reading List (919 pages)

Additional/Supplementary Readings for the Course

For the assessment of this course, each participant will choose or be assigned a (different) topic, related to some aspect of the course material, and will write an in-depth paper, critically evaluating some relevant literature and going deeper than would be possible in class. Performance will be judged on the participant’s assessment of the purpose, motivation, agenda and findings of the relevant literature, and also on his/her success in cutting through the technicalities to the essence of the selected topic. A list of possible topics follows, for each one of which a short list of suggested supplementary readings can be supplied on request. Any one of these topics could, if a participant wished, be chosen as the basis for the assessed essay, but this is not necessary: other topics may be proposed or devised as the course proceeds.

The Lecturer
Peter Lambert is Professor of Economics at the University of Oregon, USA. He has a D. Phil. in Mathematics from the University of Oxford and an M. Sc. in Economics and Econometrics from the University of York, UK. He has held visiting appointments at the Delhi School of Economics, Hebrew University of Jerusalem, University of Melbourne, Swedish School of Economics and Business Administration (Helsinki), Fiscal Affairs Department (IMF) and University of Otago, among other places. He is Editor of the “Rediscovered Classics” section of The Journal of Economic Inequality, and a member of the Editorial Board of Social Choice and Welfare. Peter’s research focuses upon measurement problems and normative issues associated with the distribution and redistribution of income, including inequality, poverty and the redistributive effects of taxes and benefits.

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