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Losing ground in the income hierarchy: relative deprivation revisited

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Abstract

The paper discusses a one-parameter generalization of individual relative deprivation measures to a two-period setting that differs from earlier approaches. The parameter is, by definition, independent of the income distributions under consideration—it is to be chosen by a social planner. Its value has an intuitive interpretation: it represents the additional weight assigned to the income shortfalls associated with agents who passed the individual in question when moving from yesterday’s income distribution to today’s. Therefore, the choice of this parameter represents an important value judgment on the part of a social planner regarding the relative impact of being left behind. As a special case, it is illustrated how the well-known Yitzhaki index can be extended to this environment. Journal of Economic Literature Classification No.: D63.

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Authors and Affiliations

  1. Department of Economics and CIREQ, University of Montreal, Montreal, Canada

    Walter Bossert

  2. INSIDE, University of Luxembourg, Esch-sur-Alzette, Luxembourg

    Conchita D’Ambrosio

Authors
  1. Walter Bossert
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  2. Conchita D’Ambrosio
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Correspondence to Walter Bossert.

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Financial support from the Fonds National de la Recherche Luxembourg and the Fonds de Recherche sur la Société et la Culture of Québec is gratefully acknowledged. We thank the associate editor Markus Jäntti and two referees for comments and suggestions.

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Bossert, W., D’Ambrosio, C. Losing ground in the income hierarchy: relative deprivation revisited. J Econ Inequal 18, 1–12 (2020). https://doi.org/10.1007/s10888-019-09428-4

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