Fiscal Incidence, Fiscal Mobility and the Poor: A New Approach
AbstractTaxes and transfers can have significant impacts on poverty and inequality. All standard measures are by definition anonymous in the sense that we do not know the identity of winners and losers. That a given combination of taxes and transfers makes some of the poor poorer, however, may be important information to incorporate into a fiscal incidence analysis. The directional mobility literature provides a useful framework to identify which individuals are adversely/favorably impacted by a particular policy. This paper introduces a "fiscal mobility matrix" to identify winners and losers. We show that taxes and transfers can lower inequality and poverty (including the severity of poverty) but still make a subgroup of the poor worse off. We use Brazilian data to illustrate how indirect taxes make around 11 percent of the non-poor poor, 15 percent of the moderate poor extremely poor, and 4 percent of the extremely poor "ultra-poor" despite any cash transfers they receive, even when standard poverty and inequality indicators decline and overall taxes are progressive.
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.
Bibliographic InfoPaper provided by Tulane University, Department of Economics in its series Working Papers with number 1202.
Length: 15 pages
Date of creation: Apr 2012
Date of revision:
fiscal incidence; taxes and transfers; inequality; poverty; redistribution; mobility;
Other versions of this item:
- Nora Lustig & Sean Higgins, 2012. "Fiscal Incidence, Fiscal Mobility and the Poor: a New Approach," Working Papers 265, ECINEQ, Society for the Study of Economic Inequality.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-22 (All new papers)
- NEP-LAM-2012-05-22 (Central & South America)
- NEP-LTV-2012-05-22 (Unemployment, Inequality & Poverty)
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.:
- François Bourguignon, 2011. "Status Quo In The Welfare Analysis Of Tax Reforms," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 603-621, December.
- Nora Lustig, 2011.
"Fiscal policy and income redistribution in Latin America: Challenging the conventional wisdom,"
227, ECINEQ, Society for the Study of Economic Inequality.
- Nora Lustig & Carola Pessino & George Gray Molina & Wilson Jimenez & Veronica Paz & Ernesto Yanez & Claudiney Pereira & Sean Higgins & John Scott & Miguel Jaramillo, 2011. "Fiscal Policy and Income Redistribution in Latin America: Challenging the Conventional Wisdom," Working Papers 1124, Tulane University, Department of Economics.
- François Bourguignon, 2011. "Non-anonymous growth incidence curves, income mobility and social welfare dominance," Journal of Economic Inequality, Springer, vol. 9(4), pages 605-627, December.
- Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2011. "A vulnerability approach to the definition of the middle class," Policy Research Working Paper Series 5902, The World Bank.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Fiscal Incidence, Fiscal Mobility and the Poor: A New Approach
by Maximo Rossi in Wikiprogress América Latina on 2012-05-29 12:12:00
- Richard M. Bird & Eric M. Zolt, 2013.
"Taxation and Inequality in the Americas: Changing the Fiscal Contract?,"
International Center for Public Policy Working Paper Series, at AYSPS, GSU
paper1315, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Richard M. Bird & Eric M. Zolt, 2013. "Taxation and Inequality in the Americas: Changing the Fiscal Contract?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1322, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Finlay).
If references are entirely missing, you can add them using this form.