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You, Me and the Mean: a Semiparametric Approach to the Redistributive Effects of Transfer Programs

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  • Garcia-Medina Cecilia

Abstract

I examine how changes in the receipt of social transfers benefits associated to program reforms have affected the Canadian income distribution over the 1996-2006 period. Using the Survey of Labour and Income Dynamics, I apply nonparametric decomposition methods to construct density counterfactuals that identify the distributive effects of each transfer program. Counterfactual densities are constructed by reweighting the income distribution with propensity score functions that reflect changes in the probability of receiving program benefits. I find that reforms to the Social Assistance program have reduced its redistributive effectiveness, whereas Child Benefits, Employment Insurance and Old Age Security are more redistributive than in 1996.

Suggested Citation

  • Garcia-Medina Cecilia, 2016. "You, Me and the Mean: a Semiparametric Approach to the Redistributive Effects of Transfer Programs," Working Papers 2016-16, Banco de México.
    • Handle: RePEc:bdm:wpaper:2016-16
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    More about this item

    Keywords

    Redistribution; income inequality; tax and transfer system; nonparametric methods;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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