Revealed Social Preferences for Equality and Growth
David Kiefer and Shahrukh Rafi Khan
forthcoming 2008 Journal
of Income Distribution
Using
the Kuznets’ inverted-U-shaped association as a structural constraint, we model
the social tradeoff between changing inequality and changing income. Observed
outcomes are thought of as attempts to find a constrained political-economic
optimum. This model implies estimates of the parameters of a social welfare
function. Our results suggest that the world is becoming an anti-egalitarian
place. An extension of the model links this finding to religious heritage,
exchange rate instability, and, surprisingly, to increased gender equality.