This paper examines how the first-best models of compensation based on the agents' talents and responsabilities analyzed in some recent contributions can be extended to a second-best context. A few social criteria are proposed and compared to alternative approaches by Roemer and Van de gaer.

The paper considers the problem of comparing income distributions for heterogeneous populations. Following Atkinson and Bourguignon (1987), we divide the population in different groups of needs and evaluate the social welfare with a utilitarian function. By considering the Generalized...