The Distributional Effects of Tax-benefit Policies under New Labour: A Shapley Decomposition
AbstractUsing counterfactual microsimulations, Shapley decompositions of time change in inequality and poverty indices make it possible to disentangle and quantify the relative effect of tax-benefit policy changes, compared to all other effects including shifts in the distribution of market income. Using this approach also helps to clarify the different issues underlying the distributional evaluation of policy reforms. An application to the UK (1998-2001) confirms previous findings that inequality and depth of poverty would have increased under the first New Labour government, had important reforms like the extensions of income support and tax credits not been implemented. These reforms have also contributed to substantially reduce poverty among families with children and pensioners.
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 Geary Institute, University College Dublin in its series Working Papers with number 200918.
Length: 21 pages
Date of creation: 10 Jun 2009
Date of revision:
Tax-benefit policy; inequality; poverty; Shapley decomposition; microsimulation;
Other versions of this item:
- Olivier Bargain, 2009. "The Distributional Effects of Tax-benefit Policies under New Labour - A Shapley Decomposition," Working Papers 200907, School Of Economics, University College Dublin.
- Bargain, Olivier, 2009. "The distributional effects of tax-benefit policies under New Labour: a Shapley decomposition," EUROMOD Working Papers EM2/09, EUROMOD at the Institute for Social and Economic Research.
- Bargain, Olivier, 2009. "The Distributional Effects of Tax-Benefit Policies under New Labour: A Shapley Decomposition," IZA Discussion Papers 4296, Institute for the Study of Labor (IZA).
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-CMP-2009-06-17 (Computational Economics)
- NEP-PUB-2009-06-17 (Public Finance)
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.:
- Stanislav Kolenikov & Anthony Shorrocks, 2005.
"A Decomposition Analysis of Regional Poverty in Russia,"
Review of Development Economics,
Wiley Blackwell, vol. 9(1), pages 25-46, 02.
- Kolenikov, Stanislav & Shorrocks, Anthony, 2003. "A Decomposition Analysis of Regional Poverty in Russia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Atkinson, A.B., 2005.
"EUROMOD and the development of EU social policy,"
EUROMOD Working Papers
EM1/05, EUROMOD at the Institute for Social and Economic Research.
- Callan, Tim & Walsh, John, 2006. "Assessing the impact of tax/transfer policy changes on poverty: methodological issues and some European evidence," EUROMOD Working Papers EM1/06, EUROMOD at the Institute for Social and Economic Research.
- Mike Brewer & Tom Clark & Alissa Goodman, 2003. "What Really Happened to Child Poverty in the UK under Labour's First Term?," Economic Journal, Royal Economic Society, vol. 113(488), pages F240-F257, 06.
- Thor O. Thoresen, 2004. "Reduced Tax Progressivity in Norway in the Nineties: The Effect from Tax Changes," International Tax and Public Finance, Springer, vol. 11(4), pages 487-506, 08.
- Jenkins, Stephen P. & Van Kerm, Philippe, 2004.
"Accounting for income distribution trends: A density function decomposition approach,"
IRISS Working Paper Series
2004-07, IRISS at CEPS/INSTEAD.
- Stephen Jenkins & Philippe Kerm, 2005. "Accounting for income distribution trends: A density function decomposition approach," Journal of Economic Inequality, Springer, vol. 3(1), pages 43-61, April.
- Jenkins, Stephen P. & Van Kerm, Philippe, 2004. "Accounting for Income Distribution Trends: A Density Function Decomposition Approach," IZA Discussion Papers 1141, Institute for the Study of Labor (IZA).
- Herwig Immervoll, 2005. "Falling Up The Stairs: The Effects Of "Bracket Creep" On Household Incomes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(1), pages 37-62, 03.
- Tom Clark & Andrew Leicester, 2004. "Inequality and two decades of British tax and benefit reform," Fiscal Studies, Institute for Fiscal Studies, vol. 25(2), pages 129-158, June.
- Immervoll, Herwig, 2004. "Falling up the stairs: an exploration of the effects of 'bracket creep' on household incomes," EUROMOD Working Papers EM3/04, EUROMOD at the Institute for Social and Economic Research.
- Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
- Tom Clark & Jayne Taylor, 1999. "Income inequality: a tale of two cycles?," Fiscal Studies, Institute for Fiscal Studies, vol. 20(4), pages 387-408, December.
- Mookherjee, Dilip & Shorrocks, Anthony F, 1982. "A Decomposition Analysis of the Trend in UK Income Inequality," Economic Journal, Royal Economic Society, vol. 92(368), pages 886-902, December.
- Dardanoni, Valentino & Lambert, Peter J., 2002. "Progressivity comparisons," Journal of Public Economics, Elsevier, vol. 86(1), pages 99-122, October.
- Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
- Ruth Hancock & Stephen Pudney & Geraldine Barker & Monica Hernandez & Holly Sutherland, 2004.
"The Take-Up of Multiple Means-Tested Benefits by British Pensioners: Evidence from the Family Resources Survey,"
Institute for Fiscal Studies, vol. 25(3), pages 279-303, September.
- Ruth Hancock & Stephen Pudney & Geraldine Barker & Monica Hernandez & Holly Sutherland, 2003. "The take-up of multiple means-tested benefits by British pensioners. Evidence from the Family Resources Survey," Discussion Papers in Economics 03/7, Department of Economics, University of Leicester.
- Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
- Richard Dickens & David T Ellwood, 2003. "Child Poverty in Britain and the United States," Economic Journal, Royal Economic Society, vol. 113(488), pages F219-F239, 06.
- Mantovani, Daniela & Sutherland, Holly, 2003. "Social indicators and other income statistics using the EUROMOD baseline: a comparison with Eurostat and National Statistics," EUROMOD Working Papers EM1/03, EUROMOD at the Institute for Social and Economic Research.
- Sutherland, Holly & Piachaud, David, 2001. "Reducing Child Poverty in Britain: An Assessment of Government Policy 1997-2001," Economic Journal, Royal Economic Society, vol. 111(469), pages F85-101, February.
- Sutherland H, 2001. "Five Labour Budgets (1997 - 2001): impacts on the distribution of household incomes and on child poverty," Microsimulation Unit Research Notes MU/RN/41, Microsimulation Unit at the Institute for Social and Economic Research.
- Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February.
- Frédéric CHANTREUIL & Alain TRANNOY, 2011. "Inequality Decomposition Values," Annales d'Economie et de Statistique, ENSAE, issue 101-102, pages 13-36.
- John Creedy & Nicolas Hérault†, 2011.
"Decomposing Inequality and Social Welfare Changes : The Use of Alternative Welfare Metrics,"
Department of Economics - Working Papers Series
1121, The University of Melbourne.
- John Creedy & Nicolas Hérault, 2011. "Decomposing Inequality and Social Welfare Changes: The Use of Alternative Welfare Metrics," Melbourne Institute Working Paper Series wp2011n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Creedy, John & Hérault, Nicolas, 2012. "Decomposing Inequality and Social Welfare Changes: The Use of Alternative Welfare Metrics," Working Paper Series 2432, Victoria University of Wellington, Chair in Public Finance.
- Eric Wong & Andrew Tsang & Steven Kong, 2014. "How Does Loan-To-Value Policy Strengthen Banks' Resilience to Property Price Shocks - Evidence from Hong Kong," Working Papers 032014, Hong Kong Institute for Monetary Research.
- Olivier Bargain, 2012. "Decomposition analysis of distributive policies using behavioural simulations," International Tax and Public Finance, Springer, vol. 19(5), pages 708-731, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geary Tech).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.