# Inequality-minimization with a given public budget

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## Abstract

We solve the problem of a social planner who seeks to minimize inequality via transfers with a fixed public budget in a distribution of exogenously given incomes. The appropriate solution method depends on the objective function: If it is convex, it can be solved by an interior-point algorithm. If it is quasiconvex, the bisection method can be used. Using artificial and real-world data, we implement the procedures and show that the optimal transfer scheme need not comply with a transfer scheme that perfectly equalizes incomes at the bottom of the distribution.

## Keywords

Redistribution Public transfers Inequality Optimization methods Interior-point algorithm Bisection method## Preview

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## Supplementary material

10888_2018_9380_MOESM1_ESM.pdf (315 kb)

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