REDISTRIBUTION MECHANISMS BASED ON INDIVIDUAL CHARACTERISTICS

This paper analyses the question of how to redistribute individual inc omes if those incomes are determined by the agents' characteristics. I t is assumed that some of these characteristics are to be considered ' relevant', whereas others should be 'irrelevant'. A redistribution mec hanism assigns a post-tax income distribution to each characteristics profile. The objective is to eliminate the influence of irrelevant cha racteristics while preserving the contributions of relevant characteri stics to the individual pre-tax incomes. An axiomatic approach is used to provide characterizations of a specific redistribution mechanism. Furthermore, it is shown that the income function (the function linkin g pre-tax incomes to characteristics) must have a separability propert y if some plausible conditions are imposed on a redistribution mechani sm.