Income distribution effects of the Swedish 1991 tax reform: An analysis of a microsimulation using generalized Kakwani decomposition
AbstractIn 1991 a major tax reform was implemented in Sweden. This study compares the income equalization (income redistribution), vertical and horizontal equity properties of the pre- and post-reform tax and transfer systems. The method used is a decomposition, first proposed by Kakwani (1984), of the difference between the generalized Gini coefficients of the pre- and post-tax/transfer income districutions. The post-reform income distribution was obtained through a microsimulation carried out by the Ministry of Finance. Several findings emerge from the study. (i) The distribution of original incomes is unambiguously more equal under the post-reform regime. (ii) The increased amounts of child and housing allowances have a considerable equalizing effect. (iii) The pre-reform tax system has a larger vertical redistributive (equalizing) component. The decreased progressivity is the most important explanation in the lower end of the distribution, while the decreased tax rate explains more of the difference in the upper end. (iv) The reform increased horizontal equity. (v) It is a value judgement which of the distributions of disposable income are the most equal. The first four of these main findings apply when the calculations were redone within each separate household group. The overall methodological conclusion is that much more information was gained when different generalizations of the decomposition were considered.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Policy Modeling.
Volume (Year): 18 (1996)
Issue (Month): 4 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505735
Other versions of this item:
- Palme, Mårten, 1994. "Income Distribution Effects of the Swedish 1991 Tax Reform: An Analysis of a Microsimulation Using Generalized Kakwani Decomposition," Working Paper Series in Economics and Finance 5, Stockholm School of Economics.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mervyn A. King, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," NBER Working Papers 0468, National Bureau of Economic Research, Inc.
- Kaplow, Louis, 1989. "Horizontal Equity: Measures in Search of a Principle," National Tax Journal, National Tax Association, vol. 42(2), pages 139-54, June Cita.
- Jane G. Gravelle, 1992. "Equity Effects of the Tax Reform Act of 1986," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 27-44, Winter.
- Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
- Fisher, Franklin M, 1987. "Household Equivalence Scales and Interpersonal Comparisons," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 519-24, July.
- Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
- Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-28, October.
- King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January.
- Robert Plotnick, 1985. "A Comparison of Measures of Horizontal Inequity," NBER Chapters, in: Horizontal Equity, Uncertainty, and Economic Well-Being, pages 239-268 National Bureau of Economic Research, Inc.
- Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
- Louis Kaplow, 1989. "Horizontal Equity: Measures in Search of a Principle," NBER Working Papers 1679, National Bureau of Economic Research, Inc.
- Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
- O'Higgins, Michael & Ruggles, Patricia, 1981. "The Distribution of Public Expenditures and Taxes among Households in the United Kingdom," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 27(3), pages 298-326, September.
- Plotnick, Robert, 1982. "The concept and measurement of horizontal inequity," Journal of Public Economics, Elsevier, vol. 17(3), pages 373-391, April.
- Cathal O'Donoghue & Massimo Baldini, 2004.
"Modelling the Redistributive Impact of Indirect Taxes in Europe: An Application of EUROMOD,"
0077, National University of Ireland Galway, Department of Economics, revised 2004.
- O'Donoghue, Cathal & Baldini, Massimo & Mantovani, Daniela, 2004. "Modelling the redistributive impact of indirect taxes in Europe: an application of EUROMOD," EUROMOD Working Papers EM7/01, EUROMOD at the Institute for Social and Economic Research.
- Wang, Chen & Caminada, Koen, 2011. "Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries," MPRA Paper 32821, University Library of Munich, Germany.
- Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2012. "Disentangling income inequality and the redistributive effect of taxes and transfers in 20 LIS countries over time," MPRA Paper 42350, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.