Is Distribution According to Contribution Fair?

Andrew Lister

In a recent article on “The Income Gap,” economist Mark Thoma asks whether the distribution of income is fair.  To answer this question, he adopts (at least for the sake of argument) the neoclassical view of income distribution.  Assuming a perfectly competitive market economy, “each person in society receives an income equal to their contribution to national output.”  Thoma admits that judgments of fairness are best left to society as a whole rather than economists, but says that “if we adopt the simple notion that every person has a right to a share of output equivalent to their contribution to it… then a competitive economic system does produce a justifiable outcome, at least in theory.”  Thoma’s criticism of this view is that it relies on “a whole host of assumptions,” and that when these idealized conditions (such as perfect competition) don’t hold, “there is nothing that says the…

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