The efficiency of race- and gender-targeted income transfers

Matthew J. Cushing, Mary G. McGarvey

Research output: Contribution to journalReview articlepeer-review


In this article, the authors quantify the potential efficiency gains from moving toward an income redistribution system that bases transfers on membership in demographic groups such as race and gender. They compute four measures of the marginal efficiency cost (MEC) of redistribution under a standard linear income tax and under a policy that tags specific demographic groups. The authors find that a tagging system can significantly lower the MEC of redistribution. At the margin, a system of tagging demographic groups achieves the goal of greater income equality at a significantly lower cost in terms of lost output.

Original languageEnglish (US)
Pages (from-to)455-486
Number of pages32
JournalPublic Finance Review
Issue number5
StatePublished - Sep 2003


  • Income equality
  • Income transfers
  • Marginal efficiency cost
  • Negative income tax
  • Tagging

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration


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