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Journal of Globalization and Development

Ed. by Stiglitz, Joseph / Emran, M. Shahe / Guzman, Martin / Jayadev, Arjun / Ocampo, José Antonio / Rodrik, Dani

2 Issues per year

Online
ISSN
1948-1837
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International Income Comparisons and Social Welfare: Methodology, Analysis, and Implications

Vivek H. Dehejia
  • Carleton University
/ Marcel C. Voia
  • Carleton University
Published Online: 2012-06-28 | DOI: https://doi.org/10.1515/1948-1837.1167

Abstract

This paper contributes to ongoing debates on international income comparisons by decomposing the income distribution functions for the United States and Canada over the period 1993 - 2000 using finite mixtures. We also conduct tests for equality, first, second and third order stochastic dominance to determine which, if either, country might exhibit greater social welfare, which in our baseline case we model simply as expected utility. Overall, our results suggest that Canada exhibits higher social welfare than U.S., principally because it exhibits lower income inequality, thereby confirming a conjecture by Joseph Stiglitz which was the motivation for our study.

This article offers supplementary material which is provided at the end of the article.

Keywords: heterogeneous income distributions; social welfare; non-parametrics; finite mixtures; stochastic dominance


Published Online: 2012-06-28


Citation Information: Journal of Globalization and Development. Volume 3, Issue 1, ISSN (Online) 1948-1837, DOI: https://doi.org/10.1515/1948-1837.1167, June 2012

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