理论论文

Which countries drive global inequality? Which states drive US inequality? We characterize the class of inequality measures that can answer these questions, permitting both an additive decomposition by subgroup and a multiplicative decomposition into within- and between-group components. Its central measure is simply the expected ratio of incomes between two randomly selected individuals. We show that global inequality fell since 1990, driven by declining disparities between countries. Inequality is primarily driven by large middle-income countries (India, China) and poor countries (Democratic Republic of Congo, Ethiopia). In the US, rising inequality is explained by widening gaps within states, while between-state inequality remains limited.

This paper develops a structural framework for analyzing top income taxation and applies it to six decades of U.S. tax history and to eight other advanced economies. The paper derives explicit expressions for top-bracket tax revenue and total excess burden across the full range of tax rates, while preserving local consistency with the sufficient-statistics approach of Saez (2001). Applied to the United States, the analysis implies that the current excess burden of the top federal tax bracket is $101 billion and that raising the top marginal tax rate to its revenue-maximizing level of 72 percent would increase annual revenue by $111 billion, given a taxable income elasticity of 0.25. The current tax rate is lower than what is consistent with a purely utility-based notion of social welfare. By contrast, Nordic countries and the United States in earlier decades appear to have operated at tax rates exceeding revenue-maximizing levels.

Should public policies address inequality due to heterogeneous life expectancy? Intuitively, taking a short life as a disadvantage, such policies should favor those with high mortality. Yet, pension systems implicitly redistribute from low-life-expectancy to high-life-expectancy people. Moreover, this direction of redistribution is optimal from the perspective of the standard utilitarian welfare criterion. We study mortality-related redistribution in a more flexible setting. We start by establishing a formal framework for the analysis by clearly distinguishing between redistribution along the mortality and income dimensions. We then characterize the conditions under which it is optimal to redistribute toward high-mortality people. One such condition is that the welfare criterion must feature an aversion to lifetime inequality that exceeds the aversion to consumption inequality.

We study technology investment and public good provision in a setting where two parties with differing valuations of the public good alternate in power. In each period, the incumbent chooses public good provision and invests in technology that lowers the cost of future public good provision. We characterize Markov perfect equilibria and show how polarization and irreversibility of investment jointly shape long-run outcomes. When polarization is low, power turnover may increase expected technology investment and public good provision, and steady-state outcomes are unaffected by the degree of reversibility. When polarization is high, however, irreversibility becomes important: the party favoring the public good invests more aggressively, and irreversible investment induces higher public good provision by both parties. As polarization rises, expected technology stock and public good provision initially decline but jump upward once the irreversibility constraint binds.

We develop a simple and intuitive Pigouvian perspective on optimal trade policy. Our approach unifies a wide range of rationales for taxing trade, from the classical optimal tariff argument to contemporary debates about global carbon emissions and geopolitics. We also clarify when trade policy intervention is warranted and when alternative domestic instruments should be used instead.

We consider a group of voters that needs to decide between two candidates. We propose a novel family of neutral and strategy-proof rules, which we call sequential unanimity rules. By demonstrating their formal equivalence to the M-winning coalition rules of Moulin (1983), we show that sequential unanimity rules are characterized by neutrality and strategy-proofness. We establish our results by developing algorithms that transform a given M-winning coalition rule into an equivalent sequential unanimity rule and vice versa. The analysis can be extended to accommodate the full preference domain in which voters may be indifferent between candidates.

Faced with political opposition to efficient carbon pricing, climate policy resorts to alternative instruments, which come with welfare and fiscal costs of acceptability. To assess these costs, this study examines second-best policies combining a constant carbon tax with subsidies to carbon-free electricity generation and storage. Using a stylized dynamic model of the energy transition featuring fossil and clean energy sources and a carbon budget, we show that the lower the carbon tax, the greater the carbon pricing gap, and the larger the subsidies required to meet the carbon budget. Overaccumulation of clean capital may be needed to crowd out fossil fuels. Calibration to the European energy market reveals costs of acceptability up to 2.6% of welfare and a budget shortfall equivalent to 56% of the present value of electricity consumption. This suggests that relying on green subsidies for the energy transition may be unwise.

May's theorem (1952), a celebrated result in social choice, provides the foundation for majority rule. May's crucial assumption of symmetry, often thought of as a procedural equity requirement, is violated by many choice procedures that grant voters identical roles. We show that a weakening of May's symmetry assumption allows for a far richer set of rules that still treat voters equally. We show that such rules can have minimal winning coalitions comprising a vanishing fraction of the population, but not less than the square root of the population size. Methodologically, we introduce techniques from group theory and illustrate their usefulness for the analysis of social choice questions.

More and more economists are finding both empirical and experimental evidence of economic behavior that is well beyond classical economics. In particular, empirical evidence ( Jullien and Salanié (2000)) and experimental evidence ( Kahneman and Tversky (1979)) supported the importance of risk loving, ambiguity loving, and related behavior in economics. However, these types of preferences have not been analyzed in the general equilibrium literature with a finite number of agents because non-convexity of preferences creates difficulty in proving existence of equilibrium. The main result in this paper provides a set of conditions under which equilibrium exists in such economies. We show that uncertainty of aggregate wealth, as well as some dominance of the endowment of the risk averters in the economy, play a role in the existence of Arrow–Debreu equilibria. This result can be extended to ambiguity in the sense of CEU, Smooth Ambiguity, and Variational Preference.

We provide the first analysis of altruism in networks. Agents are embedded in a fixed network and care about the well‐being of their network neighbors. Depending on incomes, they may provide financial support to their poorer friends. We study the Nash equilibria of the resulting game of transfers. We show that equilibria maximize a concave potential function. We establish existence, uniqueness of equilibrium consumption, and generic uniqueness of equilibrium transfers. We characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries. We then study comparative statics. A positive income shock to an individual benefits all. For small changes in incomes, agents in a component of the network of transfers act as if they were organized in an income‐pooling community. A decrease in income inequality or expansion of the altruism network may increase consumption inequality.

We analyze the long-term workforce composition when the quality of mentoring available to majority and minority juniors depends on their representation in the workforce. A workforce with ≥50% majority workers invariably converges to one where the majority is overrepresented relative to the population. To maximize welfare, persistent interventions, such as group-specific fellowships, are often needed, and the optimal workforce may include minority workers of lower innate talent than the marginal majority worker. We discuss the role of mentorship determinants, talent dispersion, the scope of short-term interventions, various policy instruments and contrast our results to the classic fairness narrative.