a column by Alberto Alesina, Elie Murard and Hillel Rapoport for VOX: CEPR’s Policy Portal
A large literature shows that generosity, both public and private, is more freely extended within the same group rather than across groups.
This column examines how immigration affects natives’ attitudes towards redistribution and the implications for welfare states in Europe. The main finding is that in regions which have received a larger share of immigrants, natives are in general less favourable towards redistribution. Some European countries face the dilemma of natives favouring generous welfare policies for themselves but opposing them for immigrants.
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Showing posts with label redistribution. Show all posts
Showing posts with label redistribution. Show all posts
Monday, 15 April 2019
Thursday, 30 August 2018
Who benefits from the ‘hidden welfare state’? The distributional effects of personal income tax expenditure in six countries
an article by Silvia Avram (University of Essex, UK) published in Journal of European Social Policy Volume 28 Issue 3 (July 2018)
Abstract
We use a tax-benefit microsimulation model to investigate the size and distributional effects of tax allowances and tax credits in six European countries.
Results indicate that tax allowances and tax credits benefit large sections of the population, not just individuals with high incomes and that together they amount to substantial amounts of foregone revenue. However, with some (important) exceptions, their effect on inequality is small.
Tax allowances are generally regressive while tax credits tend to be proportional or mildly progressive. Yet, the redistributive effect of tax allowances and tax credits works in complex and often unanticipated ways.
Other features of the income tax system (such as the tax rate schedule or the definition of the taxpayer unit) are as important in determining the size and direction of the redistributive effect as the characteristics of the tax allowances/tax credits themselves. Even instruments inversely linked to taxable income can be more beneficial to high-income households in some contexts.
Consequently, tax allowances and tax credits appear ill-suited to target resources towards households in the bottom part of the income distribution.
Full text (PDF 23pp)
Abstract
We use a tax-benefit microsimulation model to investigate the size and distributional effects of tax allowances and tax credits in six European countries.
Results indicate that tax allowances and tax credits benefit large sections of the population, not just individuals with high incomes and that together they amount to substantial amounts of foregone revenue. However, with some (important) exceptions, their effect on inequality is small.
Tax allowances are generally regressive while tax credits tend to be proportional or mildly progressive. Yet, the redistributive effect of tax allowances and tax credits works in complex and often unanticipated ways.
Other features of the income tax system (such as the tax rate schedule or the definition of the taxpayer unit) are as important in determining the size and direction of the redistributive effect as the characteristics of the tax allowances/tax credits themselves. Even instruments inversely linked to taxable income can be more beneficial to high-income households in some contexts.
Consequently, tax allowances and tax credits appear ill-suited to target resources towards households in the bottom part of the income distribution.
Full text (PDF 23pp)
Friday, 10 August 2018
voxThe economics of immigration amnesties
a column by Alessandra Casarico, Giovanni Facchini and Tommaso Frattini for VOX: CEPR’s Policy Portal
European countries have recently experienced an extraordinary inflow of asylum seekers.
Using a theoretical framework and US data, this column studies the key economic triggers which prompt policymakers to implement immigration legalisation programmes. It shows that the more restricted the occupational opportunities of undocumented immigrants and the smaller the fiscal leakage to undocumented immigrants via the welfare state, the more desirable an amnesty is.
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European countries have recently experienced an extraordinary inflow of asylum seekers.
Using a theoretical framework and US data, this column studies the key economic triggers which prompt policymakers to implement immigration legalisation programmes. It shows that the more restricted the occupational opportunities of undocumented immigrants and the smaller the fiscal leakage to undocumented immigrants via the welfare state, the more desirable an amnesty is.
Continue reading
Wednesday, 13 March 2013
Lifetime inequality and redistribution
a research paper by
Mike Brewer (Institute for Social and Economic Research and Institute for Fiscal Studies), Monica Costa Dias (Institute for Fiscal Studies, Centre for Economics and Finance at the University of Porto, and IZA) and Jonathan Shaw (Institute for Fiscal Studies
Published by Institute for Fiscal Studies in October 2012 [I must have missed it at the time but it’s definitely worth reading]
Abstract
In this paper we look at lifetime inequality to address two main questions:
We look at lifetime inequality and the redistribution properties of taxes and benefits using a dynamic life-cycle model of women’s education, labour supply and savings with family dynamics and rich individual heterogeneity in preferences and productivity.
The model is coupled with a detailed description of the UK personal tax and benefit system and is estimated on UK longitudinal data covering the 1990s and early 2000s.
We show that the tax and benefits system is more redistributive from an annual than from a lifetime perspective, and is most progressive at the bottom of the income distribution in both cases.
We then establish that heterogeneity in family experiences throughout adult life is the main vehicle through which the tax and benefits system moderates lifetime inequality. Although transitory, family conditions under which working is especially costly, such as lone-motherhood, are especially prevalent among the lifetime poor. By targeting this group, particularly using policies specifically designed to improve the work incentives of those with the lowest earnings capacity, the tax and benefits system does achieve life-cycle redistribution. Other policies like universal benefits towards family with children are less well targeted towards the lifetime poor but are more progressive and improve the work incentives in the middle 60% of the distribution of lifetime income.
JEL codes: H23, H24, I24, I38, J22, J24,
Full text (PDF 50pp)
Published by Institute for Fiscal Studies in October 2012 [I must have missed it at the time but it’s definitely worth reading]
Abstract
In this paper we look at lifetime inequality to address two main questions:
- How well does a modern tax system, based on annual information, target lifetime inequality?
- What aspects of the transfer system are most progressive from a lifetime perspective?
We look at lifetime inequality and the redistribution properties of taxes and benefits using a dynamic life-cycle model of women’s education, labour supply and savings with family dynamics and rich individual heterogeneity in preferences and productivity.
The model is coupled with a detailed description of the UK personal tax and benefit system and is estimated on UK longitudinal data covering the 1990s and early 2000s.
We show that the tax and benefits system is more redistributive from an annual than from a lifetime perspective, and is most progressive at the bottom of the income distribution in both cases.
We then establish that heterogeneity in family experiences throughout adult life is the main vehicle through which the tax and benefits system moderates lifetime inequality. Although transitory, family conditions under which working is especially costly, such as lone-motherhood, are especially prevalent among the lifetime poor. By targeting this group, particularly using policies specifically designed to improve the work incentives of those with the lowest earnings capacity, the tax and benefits system does achieve life-cycle redistribution. Other policies like universal benefits towards family with children are less well targeted towards the lifetime poor but are more progressive and improve the work incentives in the middle 60% of the distribution of lifetime income.
JEL codes: H23, H24, I24, I38, J22, J24,
Full text (PDF 50pp)
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