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Justice, Inclusion, And Incentives, Ghislain Herman Demeze-Jouatsa, Roland Pongou, Jean-Baptiste Tondji

Economics and Finance Faculty Publications and Presentations

How does justice affect individual incentives and efficiency in a political economy? We show that elementary principles of distributive justice guarantee the existence of a self-enforcing contract whereby agents non-cooperatively choose their inputs and derive utility from their pay. Chief among these principles is that your pay should not depend on your name, and a more productive individual should not earn less. We generalize our analysis to incorporate inclusivity, ensuring basic pay to unproductive agents, implemented through progressive taxation and redistribution. Our findings show that without redistribution, any self-enforcing agreement may be inefficient, but a minimal level of redistribution guarantees …