The transfer of income from high-income to low-income individuals

Question

Quizplus · Accepted Answer

The transfer of income from high-income to low-income individuals can result in the achievement of Pareto efficiency, as it can ensure that resources are allocated more efficiently and equitably. However, this transfer can be achieved through other means besides the coercive use of government power, such as voluntary charitable giving or progressive taxation. The transfer may have some effect on work incentives in a market economy, as it can impact the perceived value of work and reward, but the extent of this effect is debatable. Transfer of income does not achieve Pareto efficiency where it was not achieved before, as Pareto efficiency pertains to a state where no further gains can be made without someone else losing out. Finally, the transfer of income from high-income to low-income individuals can distort markets, as it can change the amount and distribution of resources available in the economy.

The Transfer of Income from High-Income to Low-Income Individuals