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  5. Analysing the effects of tax-benefit reforms on income distribution : a decomposition approach
 
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Analysing the effects of tax-benefit reforms on income distribution : a decomposition approach

Author(s)
Bargain, Olivier  
Callan, Tim  
Uri
http://hdl.handle.net/10197/957
Date Issued
2007-08
Date Available
2009-03-12T16:51:20Z
Abstract
To assess the impact of tax-benefit policy changes on income distribution over time, we suggest a methodology based on counterfactual simulations. We start by decomposing changes in inequality/poverty indices into three contributions: reforms of the tax-benefit structure (rules, rates, etc.), changes in nominal levels of market incomes and tax-benefit parameters (benefit amounts, tax bands, etc.), and all other changes in the underlying population (market income inequality, demographic
composition, employment level, etc.). Then, the decomposition helps to extract an absolute measure of the impact of tax-benefit changes on inequality when evaluated against a distributionally-neutral
benchmark, i.e. a situation where tax-benefit parameters are adjusted in line with income growth. We apply this measure to assess recent policy changes in twelve European countries. Finally, the full decomposition allows quantifying the relative role of policy changes compared to all other factors. We provide an illustration on France and Ireland and check the sensitivity of the results to the
decomposition order.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
University College Dublin. Geary Institute
Series
UCD Centre for Economic Research Working Paper Series
WP07/13
UCD Geary Institute Discussion Paper Series
WP/28/2007
Copyright (Published Version)
UCD School of Economics 2007
Subjects

Tax-benefit policy

Inequality

Poverty

Decomposition

Microsimulation

Classification
H23
H53
I32
Subject – LCSH
Taxation
Income distribution
Decomposition (Mathematics)
Web versions
http://www.ucd.ie/economics/research/papers/2007/WP07.13.pdf
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
https://creativecommons.org/licenses/by-nc-sa/1.0/
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bargaino_workpap_008.pdf

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Owning collection
Economics Working Papers & Policy Papers
Mapped collections
Geary Institute Working Papers

Item descriptive metadata is released under a CC-0 (public domain) license: https://creativecommons.org/public-domain/cc0/.
All other content is subject to copyright.

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