Optimal Income Distribution Rules and Representative Consumers

S-Tier
Journal: Review of Economic Studies
Year: 1994
Volume: 61
Issue: 4
Pages: 739-771

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper derives observable properties of economies with optimal income distribution rules that specify consumers' incomes as functions of aggregate income and prices. Optimality implies that the aggregate demand function is generated by a single "representative" consumer, cf. Samuelson (1956). We derive an additional implication which, when consumers receive fixed shares of aggregate income, requires that the consumers' demands become more dispersed when aggregate income rises. This last condition has empirical support. The results relate the representative consumer's preferences to a version of Kaldor's compensation criterion and show when both can be used for normative analysis without internal inconsistency.

Technical Details

RePEc Handle
repec:oup:restud:v:61:y:1994:i:4:p:739-771.
Journal Field
General
Author Count
1
Added to Database
2026-01-25