EFFECT OF MARGINAL CHANGES IN INCOME SOURCES ON UNITED-STATES INCOME INEQUALITY

The success of public policies often turns on their distributional imp acts. Policy analyses often compare inequality before and after the po licy change, but such global estimates are sensitive to the ordering o f income sources. This article presents a method for estimating distri butional effects of marginal changes in income sources-including taxes and transfers-on the Gini coefficient and the extended Gini (which pe rmits explicit focus on segments of distribution), The authors show ho w to integrate robustness and behavioral effects and to compare inequa lity effects across programs. The application yields estimates of the inequality impact per one dollar change in various U.S. taxes and tran sfers.