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Anti-Poverty Effectiveness of Taxes and Income Transfers in Welfare States

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  • Hwanjoon Kim

Abstract

This study aims to compare the anti-poverty effectiveness of taxes and income transfers among western welfare states. It is shown that a countrys poverty outcome can be decomposed into the level of market-generated poverty, the overall level of welfare efforts, and the poverty reduction efficiency of taxes and transfers. Using the LIS micro data, the decomposition analysis suggests that welfare states differ widely in respect to the anti-poverty effectiveness of taxes and transfers and that cross-national variation in anti-poverty effectiveness is mainly attributed to differences in the level of welfare efforts, rather than to differences in the poverty reduction efficiency.

Suggested Citation

  • Hwanjoon Kim, 2000. "Anti-Poverty Effectiveness of Taxes and Income Transfers in Welfare States," LIS Working papers 228, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:228
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    References listed on IDEAS

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    1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
    2. Sandmo, Agnar, 1991. "Economists and the welfare state," European Economic Review, Elsevier, vol. 35(2-3), pages 213-239, April.
    3. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    4. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
    5. Barr, Nicholas, 1992. "Economic theory and the welfare state : a survey and interpretation," LSE Research Online Documents on Economics 279, London School of Economics and Political Science, LSE Library.
    6. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    7. McKinley Blackburn, 1993. "International Comparisons of Income Poverty and Extreme Income Poverty," LIS Working papers 97, LIS Cross-National Data Center in Luxembourg.
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    Cited by:

    1. Timothy Smeeding, 2005. "Poor People in Rich Nations: The United States in Comparative Perspective," LIS Working papers 419, LIS Cross-National Data Center in Luxembourg.
    2. Lyle Scruggs & James Allan, 2005. "The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries," LIS Working papers 409, LIS Cross-National Data Center in Luxembourg.
    3. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2021. "Antipoverty Effects of Various Social Transfers and Income Taxes Across Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(3), pages 1055-1076, April.
    4. Lane Kenworthy, 2004. "Welfare States, Real Income and Poverty," LIS Working papers 370, LIS Cross-National Data Center in Luxembourg.
    5. Hwanjoon Kim, 2000. "Do Welfare States Reduce Poverty? A Critical Shortcoming in the Standard Analysis of the Anti-Poverty Effect of Welfare States," LIS Working papers 233, LIS Cross-National Data Center in Luxembourg.
    6. Francois Nielsen & David Bradley & John D. Stephens & Evelyne Huber & Stephanie Moller, 2001. "The State and Poverty Alleviation in Advanced Capitalist Democracies," LIS Working papers 278, LIS Cross-National Data Center in Luxembourg.
    7. Miežienė Rasa & Krutulienė Sandra, 2019. "The Impact of Social Transfers on Poverty Reduction in EU Countries," TalTech Journal of European Studies, Sciendo, vol. 9(1), pages 157-175, June.
    8. Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010. "Social income transfers and poverty alleviation in OECD countries," MPRA Paper 20733, University Library of Munich, Germany.
    9. Timothy Smeeding, 2005. "Government Programs and Social Outcomes: The United States in Comparative Perspective," LIS Working papers 426, LIS Cross-National Data Center in Luxembourg.
    10. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Income Inequality and Fiscal Redistribution in 31 Countries After the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 119-148, March.
    11. Gerlinde Verbist & Wim Van Lancker, 2016. "Horizontal and Vertical Equity Objectives of Child Benefit Systems: An Empirical Assessment for European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1299-1318, September.
    12. Aya Abe, 2001. "Universalism and Targeting: An International Comparison using the LIS database," LIS Working papers 288, LIS Cross-National Data Center in Luxembourg.
    13. Francois Nielsen & David Bradley & John D. Stephens & Evelyne Huber & Stephanie Moller, 2001. "The Welfare State and Gender Equality," LIS Working papers 279, LIS Cross-National Data Center in Luxembourg.
    14. E. Bárcena-Martín & S. Pérez-Moreno, 2017. "Immigrant–native gap in poverty: a cross-national European perspective," Review of Economics of the Household, Springer, vol. 15(4), pages 1105-1136, December.
    15. Timothy Smeeding, 2006. "Poor People in Rich Nations: The United States in Comparative Perspective," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 69-90, Winter.
    16. Timothy Smeeding, 2002. "No Child Left Behind?," LIS Working papers 319, LIS Cross-National Data Center in Luxembourg.
    17. Timothy Smeeding & Gary Burtless & Lee Rainwater, 2000. "United States Poverty in a Cross-National Context," LIS Working papers 244, LIS Cross-National Data Center in Luxembourg.

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