Why does redistribution cause efficiency losses

Why does redistribution cause efficiency losses? Why might society choose to redistribute Why might society choose to redistribute resources from one group to another when doing so reduces the overall size of the economic pie? Jan 24 PM. Divya S answered on January 26, I choose to redistribute wealth. The government might maine money to fund red stoi burion by imposing a tax on labor and this might Do you need an answer to a question different from the above?

Ask your question! We want to correct this solution. Tell us more. Was the final answer of the question wrong? English Language Learners Definition of regulate : to set or adjust the amount, degree, or rate of something : to bring something under the control of authority. GSA is responsible for carrying out the policy and regulatory functions assigned to it by Congress, as one of the central management agencies of the federal government. Regulatory bodies, which today comprise national governmental entities, are responsible for formulating and enforcing laws that protect the safety of patients and set basic quality standards for genetic testing.

A Regulation is an official rule. In the Government, certain administrative agencies have a narrow authority to control conduct, within their areas of responsibility. How are government regulations established? Congress passes laws that affect nearly all aspects of American life, including U. Federal agencies have the power to enforce those laws through regulation.

State government regulation examples include setting a higher minimum wage than the federal requirement. Begin typing your search term above and press enter to search. Press ESC to cancel. Skip to content Home Philosophy What is meant by redistribution of income?

Ben Davis April 13, What is meant by redistribution of income? How government budget is used to redistribution of income and wealth? Back in , economists Nicholas Kaldor and John Hicks stated that an outcome is efficient if a person made better off by a change in economic circumstances could compensate a person made worse off by the change.

Think of opening up domestic markets to freer international trade. If the winners from reduced tariffs in those markets could compensate the losers in those same markets from the move then opening up those markets would result in a more efficient domestic economy, according to the two economists.

The losers of the new arrangement will accept this new state of the world because they could receive compensation that makes up for their losses. The Kaldor-Hicks principle posits that maximizing total economic surplus could allow the winners to compensate the losers.

Under the Kaldor-Hicks principle an outcome is efficient if the winners could compensate the losers. The Kaldor-Hicks compensation principle assumes that the compensation from the winners to the losers is a simple lump-sum transaction. But we know that redistribution of any economic surplus is distortionary how much so is up for debate , which means compensation has other economic costs.

If inequality is high enough, for example, then the amount of distortion needed to compensate the losers might be high enough to make everyone worse off.