Social transfers and income inequality in OECD countries

d’Agostino, Giorgio; Pieroni, Luca; Scarlato, Margherita

doi:10.1016/j.strueco.2019.11.004

Cited by 17 publications

(7 citation statements)

References 49 publications

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“…In addition to contributing to the literature on the relationship between labor share and disposable income distribution, our analysis is also related to the literature on the effectiveness of redistribution in mitigating the direct link between market and disposable inequality. Many contributions have tried to determine which kind of fiscal instruments can be more effective in reducing the concentration of market income (Akgun et al, 2017;Atkinson, 2000;Bargain et al, 2015;Caminada et al, 2017;Causa & Hermansen, 2018;D'Agostino et al, 2020;Doorley et al, 2021;Duncan & Sabirianova Peter, 2016). Our results show that the overall effectiveness of the redistributive policy is also significantly related to the functional distribution of income in the noncomprehensive PIT hypothesis.…”

mentioning

confidence: 51%

Labor share as an "automatic stabilizer" of income inequality

Bises

Bloise

Sciala

2023

Int Tax Public Finance

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We provide a new and unexplored explanation of the relationship between the functional and personal distribution of income. By proposing a simple theoretical framework, we show that, in the noncomprehensive personal income tax (PIT) hypothesis (i.e., when some or all capital income items are excluded from the PIT base), the correlation between disposable and market income inequality depends on the labor share level, which may influence the overall effectiveness of the tax-benefit system in addition to the PIT progressivity. We test our hypothesis using panel data on 33 OECD countries from 2000 to 2017 and find that a 10-pp increase in labor share is related to a 0.06 reduction in the correlation between market and disposable income inequality. This significant result obtained after controlling for country and year fixed effects, country-specific linear trends, and several confounders capturing the characteristics of the tax-benefit system suggests that labor share may act as an "automatic stabilizer" of market income inequality. Relevant implications for tax policy concern the role of the PIT's base for the public budget's overall redistributive effect.

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mentioning

confidence: 51%

Labor share as an "automatic stabilizer" of income inequality

Bises

Bloise

Sciala

2023

Int Tax Public Finance

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“…However, it agrees with Butler and Dueker [22] and Gravina and Lanzafame [3], who argued that automation in production systems increases inequality due to the unemployment of unskilled workers. For public spending, Glomm and Kaganovich [36], Shen et al [41], and d'Agostino et al [44] highlighted that transfer programs, public education, social security, and health are the central mechanisms for reducing inequality. Even so, due to the low levels of governance in developing countries, more significant results are not obtained [37].…”

Section: Resultsmentioning

confidence: 99%

“…In OECD countries, it was shown that a 1% increase in social transfers reduced inequality by 0.5%. By including corruption levels in the model, the effect on inequality became heterogeneous across the countries [44]. It was summarized in 18 Latin American countries that there is a positive relationship between public spending and inequality in the short term.…”

Section: Public Spending-inequality Nexusmentioning

confidence: 99%

Causal Link between Technological Innovation and Inequality Moderated by Public Spending, Manufacturing, Agricultural Employment, and Export Diversification

et al. 2022

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Sustainable Development Goal 10 (SDG10) proposes the reduction of inequalities. This research highlights the importance of considering short- and long-term mechanisms for designing and applying policies to reduce income inequality. Specifically, we test for the causal link between technological innovation and income inequality using a balanced panel data sample from 73 countries worldwide. The inequality–technological innovation relationship is moderated by public spending, manufacturing, employment in agriculture, and export diversification. We use quantile regression techniques to test the impact of technological innovation on income inequality. The results offer robust empirical evidence that in most quantiles, the impact of technological innovation on inequality is positive. This result suggests that the dark side of technological innovation is that it increases income inequality. Furthermore, we find that government spending reduces inequality across all quantiles, while the effect of employment in agriculture and export diversification is inconclusive. Those responsible for social policy towards the achievement of SDG10 must include the advantages of public spending to reduce social disparities and promote social cohesion within countries.

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“…We report IV estimates with the following variables as instruments for social expenditure: the political system ( system ); the chief executive party orientation ( execrlc ) and the largest opposition party orientation ( opp1rlc ). We follow in this respect d'Agostino et al (2020) that suggest using characteristics of the political structure as instruments due to the importance of electoral systems and party preferences in determining differences in welfare state policies. See Supporting Information: Table .…”

Section: Methodology and Datamentioning

confidence: 99%

Health human capital formation in the OECD: Exploring the role of welfare state composition

Santos,

Simões,

Sousa

2023

Economics & Politics

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This study examines the relationship between welfare state or social expenditure composition and health human capital in 37 OECD countries spanning 1980–2018. Our findings confirm that public health spending has a positive effect on health capital formation. Dissecting social expenditure according to other nine social spending categories reveals a positive influence for old age pensions and unemployment benefits. The results for the remaining social programs vary with the health capital proxy and estimation method used. It thus appears that more comprehensive and universal social programs, possibly by guaranteeing the necessary income, do a better job in improving health human capital.

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Social transfers and income inequality in OECD countries

Cited by 17 publications

References 49 publications

Labor share as an "automatic stabilizer" of income inequality

Labor share as an "automatic stabilizer" of income inequality

Causal Link between Technological Innovation and Inequality Moderated by Public Spending, Manufacturing, Agricultural Employment, and Export Diversification

Health human capital formation in the OECD: Exploring the role of welfare state composition

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