The contribution of government transfer programs to inequality.A net-benefit approach
AbstractThe contribution of government transfer programs to inequality is often assessed by analyzing to what extent the benefits paid go to lower income families. Several analysts have found that some key government transfers actually go mostly to middle and high income families and thus contribute to greater inequality. We argue in this paper that the impact of these programs on inequality should be evaluated considering the benefits received net of the taxes paid by households to finance the programs, since higher income households receive higher benefits but they also pay higher taxes. We illustrate this approach by estimating the impact of four government programs on inequality in Uruguay and show that the conclusions are different depending on whether we use gross or net benefits in the estimation.
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Bibliographic InfoPaper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 0606.
Length: 17 pages
Date of creation: Jun 2006
Date of revision:
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Transfers; inequality; redistribution;
Other versions of this item:
- Alvaro Forteza & Ianina Rossi, 2009. "The contribution of government transfer programs to inequality. A net-benefit approach," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 55-67, May.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- 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-2006-09-23 (All new papers)
- NEP-LAM-2006-09-23 (Central & South America)
- NEP-PBE-2006-09-23 (Public Economics)
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