The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
This paper examines the redistributive effects of Korea's fiscal policies, including consumption taxes and in-kind benefits. Using the Household Income and Expenditure Survey of 2007, we find that taxes and transfers reduce income inequality in Korea by 13.8 percent. Contrary to the popular belief that direct taxes are the key tool for redistribution, in-kind benefits, direct taxes, and social security contributions all decrease the Gini coefficient by 6.7, 4.7, and 2.9 percentage points, respectively. The redistributive effect of consumption taxes is small and negative (-0.5 percentage point). Policy simulations indicate that education spending financed by the personal income tax has a positive redistributive effect and that the lower 70 percent of households enjoy positive net benefits. Spending targeting the poor has a strong redistributive effect, which implies low popularity because the majority of households face net losses.
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe estimation problem in this paper is motivated by maximum score estimation of preference parameters in the binary choice model under uncertainty in which the decision rule is a¤ected by conditional expectations. The preference parameters are estimated in two stages: we estimate conditional expectations nonparametrically in the …rst stage and then the preference parameters in the second stage based on Manski (1975Manski ( , 1985's maximum score estimator using the choice data and …rst stage estimates. This setting can be extended to maximum score estimation with nonparametrically generated regressors. The paper establishes consistency and derives rate of convergence of the two-stage maximum score estimator. Moreover, the paper also provides su¢ cient conditions under which the two-stage estimator is asymptotically equivalent in distribution to the corresponding single-stage estimator that assumes the …rst stage input is known. The paper also presents some Monte Carlo simulation results for …nite-sample behavior of the two-stage estimator.
This paper analyzes income mobility betwen two consecutive periods and estimates the potential effects of introducing differentiated poverty treatment on direct government welfare expenditure. This is done by using a constructed pseudo-panel under the pre-existing two conditions: log-normality of household income and the stability of the household income distribution over time. This paper finds that income mobility shrank from the late 1990s onward. As a result, the probability that a poor household escapes from poverty dwindles. This is partly because the labor market becomes slightly more rigid and also partly because the population is rapidly aging: the share of the elderly who are mostly retirees is growing rapidly. A pseudo-panel study shows that total subsidies to support all poor household escapes from poverty dwindles. This is partly because the labor market becomes slightly more rigid and also partly because the population is rapidly aging: the share of the elderly who are mostly retirees is growing rapidly. A pseudo-panal study shows that total subsidies to support all poor households amount to 7.0 trillion won a year. It also shows that the lifelong poverty rate is 3.4%, approximately on third of the short-run poverty rate of 10.9%. A differential treatement on short-run and long-run poverty can save roughly half the fiscal burden of supporting the poor.
This paper develops maximum score estimation of preference parameters in the binary choice model under uncertainty in which the decision rule is affected by conditional expectations. The preference parameters are estimated in two stages: we estimate conditional expectations nonparametrically in the first stage and then the preference parameters in the second stage based on Manski (1975Manski ( , 1985's maximum score estimator using the choice data and first stage estimates. The paper establishes consistency and derives the rate of convergence of the corresponding two-stage estimator, which is of independent interest for maximum score estimation with generated regressors. The paper also provides results of some Monte Carlo experiments.
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