Fiscal Redistribution and Income Inequality in Latin America

By Edwin Goñi, J. H. López, L. Serven. 2008

342 citations recorded by the source corpus.

Income inequality in Latin America ranks among the highest in the world. It can be traced back to the unequal distribution of assets (especially land and education) in the region. But the extent to which asset inequality translates into income inequality depends on the redistributive capacity of the state. This paper documents the performance of Latin American fiscal systems from the perspective of income redistribution using newly-available information on the incidence of taxes and transfers across the region. The findings indicate that: (i) the differences in income inequality before taxes and transfers between Latin America and Western Europe are much more modest than those after taxes and transfers; (ii) the key reason is that, in contrast with industrial countries, in most Latin American countries the fiscal system is of little help in reducing income inequality; and (iii) in countries where fiscal redistribution is significant, it is achieved mostly through transfers rather than taxes. These facts stress the need for fiscal reforms across the region to further the goal of social equity. However, different countries need to place different relative emphasis on raising tax collection, restructuring the tax system, and improving the targeting of expenditures.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/7cf01ecf2e75fdf52edb295baa23a854c7402d6e

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Citations in the corpus

The Impact of Taxes and Social Spending on Inequality in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview (2013, neutral): “What are the factors that limit the redistributive and poverty-reducing power of taxes and spending? i Inequality and Poverty Reduction Taxes and cash transfers reduce inequality and poverty by nontrivial amounts in Argentina16 and Uruguay, less so in Mexico and little in Peru.”
The Strugglers: The New Poor in Latin America? (2014, background): “59 OECD (2008), Goñi et al. (2011), Birdsall and de la Torre (2007).”
Commitment to Equity Assessment (CEQ): Estimating the Incidence of Social Spending, Subsidies and Taxes Handbook (2013, methodology): “, incidence or concentration shares by quintiles or deciles that have been calculated by other authors as is done by Goñi et al. (2011) for”
The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, and Peru: A Synthesis of Results (2012, neutral): “…as part of market income because they are deferred income (Breceda et al., 2008; Immervoll et al., 2009) and treating them as a government transfer, especially in systems with a large subsidized component (Goñi et al., 2011; Immervoll et al., 2009; Lindert et al., 2006; Silveira et al., 2011).”
Homogeneous middles vs. heterogeneous tails, and the end of the ‘Inverted-U’: the share of the rich is what it's all about (2011, background): “2 per cent), in the EU it falls by nearly one-third (Goñi et al., 2008).”
DOES GOVERNMENT SPENDING AFFECT INCOME INEQUALITY? A META‐REGRESSION ANALYSIS (2017, neutral): “However, social welfare spending still has a much weaker (less negative) relationship with income inequality when developed countries are excluded from the analysis, suggesting that targeting problems remain significant in many developing countries (Coady et al 2004, Goni et al 2011).”
Inequality in developed countries and Latin America: coordinated, liberal and hierarchical systems (2009, background): “Overall, roughly 70 per cent of public transfers flow to the richest 40 per cent of the population (Goñi et al., 2008: 19).”