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Social Spending, Taxes and Income Redistribution in Ecuador

Author

Listed:
  • Freddy Paúl Llerena Pinto

    (Ecuadorian Association of Population Studies and ECONOMICA CIC. Research Center)

  • M. Cristhina Llerena Pinto

    (ECONOMICA CIC. Research Center)

  • M. Andrea Llerena Pinto

    (ECONOMICA CIC. Research Center)

Abstract

An analysis of the redistributive effect of fiscal policy on poverty reduction and income distribution in Ecuador using household survey data is described. Due to the detail and depth of the database, it is possible to single out the effects of direct transfers and taxes, indirect taxes and subsidies, and the use of public education and health services. Standard incidence analysis shows that direct taxes are progressive. Nonetheless, they have a negligible effect on both income distribution and poverty. Indirect taxes are progressive as well, due to several exemptions from the value added tax. Social spending on direct transfers, education, and health is progressive in absolute terms, except for secondary education, wherein it is neutral. Ecuador ranks first in inequality reduction effectiveness and second in poverty reduction effectiveness when compared to six other Latin American countries. However, it ranks only fourth in overall inequality and poverty reduction.

Suggested Citation

  • Freddy Paúl Llerena Pinto & M. Cristhina Llerena Pinto & M. Andrea Llerena Pinto, 2015. "Social Spending, Taxes and Income Redistribution in Ecuador," Commitment to Equity (CEQ) Working Paper Series 28, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:28
    as

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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq28.pdf
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    References listed on IDEAS

    as
    1. Marisa Bucheli & Nora Lustig & Máximo Rossi & Florencia Amábile, 2014. "Social Spending, Taxes, and Income Redistribution in Uruguay," Public Finance Review, , vol. 42(3), pages 413-433, May.
    2. Sean Higgins & Nora Lustig & Julio Ramirez & Billy Swanson, 2013. "Social Spending, Taxes and Income Redistribution in Paraguay," Working Papers 1311, Tulane University, Department of Economics.
    3. Sean Higgins & Nora Lustig & Julio Ramirez & William Swanson, 2013. "Social Spending, taxes and income redistribution in Paraguay," Commitment to Equity (CEQ) Working Paper Series 1311, Tulane University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Poverty; Inequality; Transfers and Taxes; Government Benefits; Ecuador;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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