Content

Part 1: Exposition of the basic tools for measuring the size distribution of income (e.g. Lorenz curves and concentration curves), summarizing this size distribution into aggregate measures of welfare, inequality and poverty. We characterize welfare, inequality and poverty measurement in terms of properties of underlying social welfare functions.

Part 2: Study of the effect of the tax and transfer system on the post tax income distribution: different definitions of progressivity of a tax system; relation between progressivity and changes in the post tax income distribution (with the pre tax income distribution given).
Detailed description of contents:

• The Size Distribution of Income: Basic Tools
• Robust Welfare Comparisons (Stochastic dominance)
• Social Welfare and Inequality Aversion
• Inequality orderings
• Survey of other Measures of Inequality (Gini, Generalised Entropy, …)
• Poverty Measurement
• Inequality and Welfare Measurement in Heterogeneous Populations and multidimensional welfare analysis
• Progressive Income Taxation
• Income Tax Progression and Redistribution (with empirical application)
• Explaining changes in inequality

On completion of the course the students will be able

• to process a microdataset with individual data on income and socio-economic charateristics, by calculating individual metrics of welfare and deprivation;
• to aggregate the individual metrics to assess social welfare, inequality and poverty represented by the representative micro dataset;
• to critically evaluate empirical statements on the level and evolution of inequlaity, poverty and social welfare in the world, the EU and Belgium.

Course material

The lectures are based on:

• Lambert (2001), The Distribution and Redistribution of Income, Manchester University Press, 3rd ed
• Cowell (2011), Measuring Inequality, 3rd edition, Oxford University Press.
• Journal articles and chapters of books, made available (for sale) by the start of the course at Cursusdienst Ekonomika.
• Slides. These do not include additional material, but summarize the lectures. Available on Toledo.