Chapter 8 Lifetime Redistribution Through Taxes, Transfers and Non-Cash Benefits

Pettersson, Thomas; Pettersson, Tomas

doi:10.1016/s1571-0386(06)15008-5

Cited by 7 publications

(9 citation statements)

References 5 publications

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“…Several papers have looked at the reallocative effect of taxes and transfers on a lifetime basis (Falkingham and Harding, 1996, Nelissen, 1998, Björklund and Palme, 2002, Pettersson and Pettersson, 2007, Ter Rele et al, 2007, Bovenberg et al, 2008, Bartels, 2012, Levell et al, 2017. This literature systematically finds that the reallocation of lifetime earnings through the tax-and-transfer system partially offsets disparities in lifetime earnings.…”

Section: Introductionmentioning

confidence: 99%

Insurance, Redistribution, and the Inequality of Lifetime Income

Haan

Kemptner

Prowse³

2017

SSRN Journal

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In this paper, we study how the tax-and-transfer system reduces the inequality of lifetime income by redistributing lifetime earnings between individuals with different skill endowments and by providing individuals with insurance against lifetime earnings risk.Based on a dynamic life-cycle model, we find that redistribution through the tax-andtransfer system offsets around half of the inequality in lifetime earnings that is due to differences in skill endowments. At the same time, taxes and transfers mitigate around 60% of the inequality in lifetime earnings that is attributable to employment and health risk. Progressive taxation of annual earnings provides little insurance against lifetime earnings risk. The lifetime insurance effects of taxation may be improved by moving to a progressive tax on lifetime earnings. Similarly, the lifetime insurance and redistributive effects of social assistance may be improved by requiring wealthy individuals to repay any social assistance received when younger.

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Section: Introductionmentioning

confidence: 99%

Insurance, Redistribution, and the Inequality of Lifetime Income

Haan

Kemptner

Prowse³

2017

SSRN Journal

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“…For Sweden, Petterson and Petterson (2003) carried out a similar analysis and arrived at the same conclusion. The latter study offered coverage of the system of taxes and transfers that is similar to that of this study.…”

Section: A Comparison With Other Studies On Lifetime Redistributionmentioning

confidence: 71%

“…As was previously pointed out by Davies et al. (1984), Falkingham and Harding (1996), Nelissen (1998), Salas and Rabadán (1998) and Petterson and Petterson (2003), there are two reasons why a lifetime approach leads to different outcomes on these issues. The first is that annual calculations ignore the intra‐personal element of redistribution that results from the life‐cycle dependencies that are ingrained in the system of taxes and transfers.…”

Section: Methodsmentioning

confidence: 91%

Measuring the Lifetime Redistribution Achieved by Dutch Taxation, Cash Transfer and Non‐cash Benefits Programs

Rele

2007

Review of Income and Wealth

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This paper assesses how the Dutch system of taxation, cash transfers and non-cash benefits redistributes between the rich and the poor. The approach in this paper deviates from the usual approach by incorporating the full life cycle in the measurements, rather than only the annual effects. Moreover, the coverage is larger than is usually the case: the paper takes account of both direct and indirect taxes and direct and indirect benefits. In order to obtain the measurements on redistribution, we use the level of educational attainment to classify the population. We therefore measure, in terms of present values, the average net benefit from government policies for an average representative person of each level of education. The results indicate a sizable redistribution from the rich to the poor and a significant reduction of welfare inequality. The net effect on welfare inequality is, however, substantially smaller than when measured on an annual basis. Copyright 2007 The Author; Journal compilation International Association for Research in Income and Wealth 2007.

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“…Our paper relates to various strands of the literature. As noted in the introduction, while annual redistribution is still the predominant concept considered when assessing how government policies reduce income inequalities, there is also a substantial and growing literature that analyzes income redistribution over the lifecycle 1995Björklund and Palme;2002;Pettersson and Pettersson;2007;Ter Rele;2007;Bovenberg et al;2008;Hoynes and Luttmer;Bartels;Bengtsson et al;2016;Levell et al;2017;Haan et al;Roantree and Shaw;.…”

Section: Literature Reviewmentioning

confidence: 99%

Redistribution and Insurance in Welfare States Around the World

Bartels¹,

Neumann²

2020

Preprint

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Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective, reducing the level of actual redistribution across individuals. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, South Korea, Switzerland, the United Kingdom, and the United States, we find that welfare states like Germany that are assumed to engage in a high level of redistribution actually achieve relatively less redistribution between individuals in the long run than the United Kingdom or the United States. Regression results show that a higher share of elderly in a country is associated with more annual redistribution, but with less long-run redistribution between individuals. The results suggest that, in welfare states with aging populations, we might expect growing annual redistribution that, to a substantial extent, is in fact income smoothing for the elderly. (Stone Center on Socio-Economic Inequality Working Paper Series)

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Chapter 8 Lifetime Redistribution Through Taxes, Transfers and Non-Cash Benefits

Cited by 7 publications

References 5 publications

Insurance, Redistribution, and the Inequality of Lifetime Income

Insurance, Redistribution, and the Inequality of Lifetime Income

Measuring the Lifetime Redistribution Achieved by Dutch Taxation, Cash Transfer and Non‐cash Benefits Programs

Redistribution and Insurance in Welfare States Around the World

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