This paper aims to study the following positive question: If some of the central features of a market-oriented economy are explicitly taken into account, then what is the extent to which government policy can or can not reduce economic inequalities in such an economy?It is shown that several...

The paper proposes a new welfare-based measure to evaluate the distributive effects of public programs. The proposed measure differs from traditional approaches in two important ways: first, it is based on life-cycle considerations, since most public expenditure programs have an intertemporal...