Analysing the Effects of Tax-Benefit Reforms on Income Distribution: A Decomposition Approach

Bargain, Olivier; Callan, Tim

doi:10.2139/ssrn.1026900

Cited by 12 publications

(14 citation statements)

References 30 publications

(26 reference statements)

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“…As we need to compare this counterfactual with the original t distribution using a scale‐variant distributional functional, such as the quantiles, we need to index disposable incomes by the average market income index to ensure all incomes are expressed in period t values (in terms of productivity and prices), in line with the other counterfactual differences. As the aim of the tax–benefit transformation is to evaluate actual policy changes, we use a distributional neutral benchmark given by the actual change in average market income levels between period t and s (Bargain and Callan, 2010). Specifically, we adjust the simulated incomes expressed in 2011 values by the ratio between the mean market income in 2015 and 2011.…”

Section: Methodology and Datamentioning

confidence: 99%

“…It simulates social benefits, taxes, and social insurance contribution entitlements, utilizing the actual legal rules of the individual policies. Encompassing present and historic tax–benefit policies, EUROMOD allows a user to swap policies between different periods (see, e.g., Levy et al ., 2007; Bargain and Callan 2010; Bargain 2012). We sum income derived from household benefits (

y_{h}^{B}

) and household direct taxes (

y_{h}^{T}

) individually.…”

Section: Methodology and Datamentioning

confidence: 99%

“…Most benefit monetary variables are uprated by benefit specific indices (e.g., social assistance benefits are uprated by an index that captures the change in the average amount of monetary social assistance benefit received between years). Similar swapping of tax–benefit policy rules and parameters was implemented for analyzing trends in income distributions (see Bargain and Callan, 2010; Bargain, 2012; Azpitarte and Herault, 2016; Paulus and Tasseva, 2020) and cross‐country differences (see Dardanoni and Lambert, 2002; Levy et al ., 2007; Sologon et al ., 2021).…”

Section: Methodology and Datamentioning

confidence: 99%

“…Future work will assess the sensitivity to different degrees of disaggregation. We have more disaggregation than Bargain and Callan (2010) and Bargain (2012), as we wanted to decompose the drivers of market incomes. The model is constructed on the basis of the European Union Statistics on Income and Living Conditions (EU-SILC) survey, a household survey that is available in a harmonized form for all European Union (EU) countries.…”

confidence: 99%

“…By applying this approach, we provide a more detailed decomposition than existing studies that seek to unpack the drivers of inequality changes. Most research on the topic follows the approach proposed by Bargain and Callan (2010) and Bargain (2012), which uses two “swaps” : market incomes and tax–benefit rules. For Lithuania, Navickė (2020), besides the policy and income effect, also added the demographic effect via re‐weighting following DiNardo et al .…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Income Inequality and Redistribution in Lithuania: The Role of Policy, Labor Market, Income, and Demographics

Černiauskas

Sologon

O’Donoghue

et al. 2021

Review of Income and Wealth

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We model the household disposable income distribution in Lithuania and explore the drivers of the increase in income inequality between 2007 and 2015. We quantify the contributions of four factors to changes in the disposable income distribution: (i) demographics; (ii) labor market structure; (iii) returns and prices; and (iv) tax-benefit system. Results show that the effects of the factors were substantial and reflected heterogeneous developments over two subperiods: changes in the tax and benefit system cushioned a rapid rise in market income inequality because of the global financial crisis during 2007-2011, but failed to do so during the subsequent years of economic expansion, when rising returns in the labor and capital markets significantly increased disposable income inequality. We also find that declining marriage rates contributed to the increase in income inequality in Lithuania.

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Section: Methodology and Datamentioning

confidence: 99%

y_{h}^{B}

) and household direct taxes (

y_{h}^{T}

) individually.…”

Section: Methodology and Datamentioning

confidence: 99%

Section: Methodology and Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Income Inequality and Redistribution in Lithuania: The Role of Policy, Labor Market, Income, and Demographics

Černiauskas

Sologon

O’Donoghue

et al. 2021

Review of Income and Wealth

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The Great Recession, Austerity and Inequality: Lessons from Ireland

Savage

Callan

Nolan

et al. 2018

Review of Income and Wealth

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The advent of the Great Recession and the widespread adoption of fiscal austerity policies have heightened concern about inequality and its effects. We examine how the distribution of income in Ireland -a country which experienced one of the most severe economic contractions -has evolved over the years 2008 to 2013. Standard cross-sectional analysis of the income distribution shows broad stability in the Gini coefficient and in decile shares, with one main exception: the share of the bottom decile fell sharply, with the largest fall in average incomes being for that group. Longitudinal analysis shows that the falls in the average income for the bottom decile were not due to decreasing income for those remaining in the bottom decile, but to falls in income from those initially located in higher deciles. The extent of redistribution through taxes and transfers increased strongly, as measured by the Reynolds-Smolensky index, which rose from 0.20 before the onset of the crisis to 0.27 in 2013.. Analysis indicates that about three-quarters of this increased redistribution is due to automatic stabilisers and one-quarter to discretionary policy changes.

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Vergilendirme Politikalarının Gelir Dağılımı Üzerindeki Etkileri: AB Ülkeleri ve Türkiye İçin Yeni Nesil Bir Panel Veri Analizi

Polat¹

2021

Süleyman Demirel Üniversitesi Vizyoner Dergisi

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Devletin ekonomiye müdahalesinin en önemli nedenleri arasında, gelir dağılımındaki dengesizliği bertaraf etmek yer almaktadır. Bu bağlamda, devletlerin, gelir dağılımında adaleti sağlamak için kullandıkları en önemli olgu vergi politikasıdır. Çalışmada, gelir dağılımı açısından vergilerin dolaylı ve dolaysız tasnifi göz önünde bulundurulmuştur. Dolaysız vergilerin dolaylı vergilere göre gelir dağılımında daha etkin olduğu bilinen bir gerçektir. Ancak, gelişmekte olan ülkelere bakıldığında bu gerçek göz ardı edilmektedir. Türkiye'de de dolaylı vergilerin toplam vergi gelirleri içindeki payı daha yüksektir. Çalışmanın amacı, Türkiye'de ve 28 AB üyesi ülkede, dolaylı ve dolaysız vergilerin gelir dağılımı üzerindeki etkisinin analizidir. Çalışmada; gelir dağılımı ve vergi kavramları teorik olarak ele alındıktan sonra, dolaylı ve dolaysız vergilerin gelir dağılımı üzerindeki etkisi Türkiye ve 28 AB ülkesi için ampirik olarak analiz edilmiştir. Bu çalışmada; 28 AB üyesi ülke ve Türkiye'de uygulanan vergi politikalarının, gelir dağılımı dengesizliği üzerindeki etkileri, 2006-2018 dönemi için yeni nesil panel veri analizi yöntemleri kullanılarak araştırılmıştır. Bu çalışmanın analiz sonuçlarına göre; toplam vergi gelirleri içindeki dolaylı vergilerin payının artması gelir eşitsizliğini daha da artırırken, toplam vergi gelirleri içindeki dolaysız vergilerin payının artması bu eşitsizliği azaltmaktadır. İnsani gelişmişlik seviyesindeki artışların da gelir eşitsizliğini azaltıcı yönde etkilerinin olduğu belirlenmiştir.

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Analysing the Effects of Tax-Benefit Reforms on Income Distribution: A Decomposition Approach

Cited by 12 publications

References 30 publications

Income Inequality and Redistribution in Lithuania: The Role of Policy, Labor Market, Income, and Demographics

Income Inequality and Redistribution in Lithuania: The Role of Policy, Labor Market, Income, and Demographics

The Great Recession, Austerity and Inequality: Lessons from Ireland

Vergilendirme Politikalarının Gelir Dağılımı Üzerindeki Etkileri: AB Ülkeleri ve Türkiye İçin Yeni Nesil Bir Panel Veri Analizi

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