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Pro-Poor Tax reforms, with an Application to Mexico

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  • Jean-Yves Duclos

    ()
    (Département d’économique and CIRPÉE, Université Laval, Canada)

  • Paul Makdissi

    ()
    (Department of Economics, University of Ottawa)

  • Abdelkrim Araar

    ()
    (Département d’économique and CIRPÉE, Université Laval, Canada)

Abstract

This paper proposes a new methodology to test for whether indirect tax reforms are pro-poor. The methodology extends stochastic dominance techniques and enables identifying tax reforms that will necessarily be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country.

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Bibliographic Info

Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 0907E.

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Length: 34 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:ott:wpaper:0907e

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Keywords: Stochastic dominance; pro-poor changes; tax reforms; indirect taxation; poverty; Mexico;

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References

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  1. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June.
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  3. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
  4. Ravallion, Martin & Shaohua Chen, 2001. "Measuring pro-poor growth," Policy Research Working Paper Series 2666, The World Bank.
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  6. Russell Davidson & Jean-Yves Duclos, 2006. "Testing for Restricted Stochastic Dominance," Working Papers 36, ECINEQ, Society for the Study of Economic Inequality.
  7. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
  8. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
  9. Jean-Yves Duclos, 2009. "What is “Pro-Poor”?," Social Choice and Welfare, Springer, vol. 32(1), pages 37-58, January.
  10. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
  11. Paolo Liberati, 2003. "Poverty Reducing Reforms and Subgroup Consumption Dominance Curves," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(4), pages 589-601, December.
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  14. Makdissi, Paul & Wodon, Quentin, 2002. "Consumption dominance curves: testing for the impact of indirect tax reforms on poverty," Economics Letters, Elsevier, vol. 75(2), pages 227-235, April.
  15. Duclos, Jean-Yves & Makdissi, Paul, 2003. "Restricted and Unrestricted Dominance for Welfare, Inequality and Poverty Orderings," Cahiers de recherche 0303, CIRPEE.
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  18. Alessandro Santoro, 2007. "Marginal Commodity Tax Reforms: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(4), pages 827-848, 09.
  19. Wildasin, David E, 1984. "On Public Good Provision with Distortionary Taxation," Economic Inquiry, Western Economic Association International, vol. 22(2), pages 227-43, April.
  20. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  21. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
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  23. Essama-Nssah, B., 2005. "A unified framework for pro-poor growth analysis," Economics Letters, Elsevier, vol. 89(2), pages 216-221, November.
  24. Satya Ranjan Chakravarty, 1983. "Ethically Flexible Measures of Poverty," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 74-85, February.
  25. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
  26. Fishburn, Peter C. & Willig, Robert D., 1984. "Transfer principles in income redistribution," Journal of Public Economics, Elsevier, vol. 25(3), pages 323-328, December.
  27. Yitzhaki, Shlomo & Thirsk, Wayne, 1990. "Welfare dominance and the design of excise taxation in the Cote d'ivoire," Journal of Development Economics, Elsevier, vol. 33(1), pages 1-18, July.
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Cited by:
  1. Wasiu Adekunle Are, 2012. "Poverty-Reducing Directions of Indirect Marginal Tax Reforms in Ireland," Working Papers 201230, School Of Economics, University College Dublin.

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