The New Economics of Income Distribution

The New Economics of Income Distribution

Introducing Equilibrium Concepts into a Contested Field

Friedrich L. Sell

With the increased interest in the role of inequality in modern economies, this timely and original book explores income distribution as an equilibrium phenomenon. Though globalization tends to destroy earlier equilibria within industrialized and developing countries, new equilibria are bound to emerge. The book aims at a better understanding of the forces that create these new equilibria in income distribution and examines the concept at three distinct levels: market equilibrium, bargaining equilibrium and political economy equilibrium. In particular, the author addresses the question of how the main factor markets of labour and capital are related to income distribution.

Chapter 9: Final remarks

Friedrich L. Sell

Subjects: economics and finance, welfare economics


In ‘Final remarks’, we first test for the (in-)effectiveness of redistribution policies taking the case of Germany. One result for the period between 2001 and 2011 is that the correlation between the two distinct Gini coefficients turns out to be quite significant. This is a clear sign that the government was unable to implement effective redistribution policies. Opposed to this insight, the period 1991–2000 reveals no significant correlation between the two distinct concepts of the Gini coefficient, a result that we take as a strong indicator for some sort of policy effectiveness in the field of redistribution. In the remainder of the chapter, we concentrate on the concept of ‘equity aversion’ and demonstrate with the help of three examples how this type of social preference can inspire the economics of distribution and of redistribution.

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