Lecture Notes - Income Distribution

Lecture Notes - Income Distribution - Income...

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Income Distribution (chapter 7) 1. The Basis for Income Redistribution (1) The Utilitarian Approach Income should be distributed so as to max the total utility of the society. Utility maximization of society is achieved at the point where MUs of income are equalized across all members of the society. (2) Needs vs Earnings and the Trade-off between Equity and Efficiency Market outcomes may result in household earnings below the minimum level required for survival. Trade-off between equity and efficiency. The way how the economic pie is divided can ultimately affect its size. 2. Government Programs of Assistance to the Poor in Canada Supplements to Old Age Security (OAS) Canada Child Tax Benefit (CCTB) Housing assistance programs Minimum wage law Other programs (first nation people, war veterans) 3. Economics Analysis of Selected Subsidy and Transfer Programs (1) Cash transfer vs In-kind transfer In-kind transfer : Non-cash benefits that will be consumed by recipients.
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