The Redistributive Effects of Tax Benefit Systems in the Enlarged EU

By Clemens Fuest, Judith Niehues, Andreas Peichl. Social Science Research Network, 2010

122 citations recorded by the source corpus.

How do different components of the tax and transfer systems affect disposable income inequality? This article explores the redistributive effects of different tax benefit instruments in the enlarged European Union (EU) based on two approaches. Inequality analysis based on the sequential accounting approach suggests that benefits are the most important factor reducing inequality in the majority of countries. The factor source decomposition approach, however, suggests that benefits play a negligible role and sometimes even contribute slightly positively to inequality. On the contrary, here taxes and social contributions are by far the most important contributors to income inequality reduction. The authors explain these partly contradictory results with the different normative focus of the two approaches and show that benefits have other aims than redistribution.

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Citations in the corpus

Microsimulation and policy analysis (2014, methodology): “For example, Mahler and Jesuit (2006) and Wang et al. (2012) use household survey data from the Luxembourg Income Study (LIS) to analyse redistributive effects in the OECD countries and Fuest et al. (2010) and Atta-Darkua and Barnard (2010) use the SILC data for EU countries.”
Welfare regimes and welfare state outcomes in Europe (2012, methodology): “For a detailed discussion of the shortcomings of this standard approach of measuring redistribution and further information on the exact definition of all income components see Fuest et al. (2010).”
Tackling income inequality The role of taxes and transfers (2013, unknown): “Fuest et al. (2010) assess the redistributive impact of personal income taxes and social security contributions paid by both employees and employers.”
Income Redistribution through Taxes and Transfers across OECD Countries (2017, background): “Ferger, 2007), but this model remains relatively heterogeneous (Fuest et al., 2010).”
The impact of redistributive policies on inequality in OECD countries (2012, unknown): “This direct inequality reducing effect is confirmed by empirical studies based on individual-level data that study the effect of social policies on the difference between pre- and post-government inequality distributions (e.g., Garfinkel et al. 2006; Fuest et al. 2010).”
Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany (2012, background): “However, single parents receive important benefits, targeting children in low-income households, as the implicit equivalence scales in the tax-benefit system generously compensate for the presence of children (Fuest et al., 2010), and hence their relative position is improving.”