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The impact of redistributive policies on inequality in OECD countries

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  • Doerrenberg, Philipp
  • Peichl, Andreas

Abstract

Due to behavioral effects triggered by redistributional interventions, it is still an open question whether government policies are able to effectively reduce income inequality. We contribute to this research question by using different country-level data sources to study inequality trends in OECD countries since 1980. We first investigate the development of inequality over time before analyzing the question of whether governments can effectively reduce inequality. Different identification strategies, using fixed effects and instrumental variables models, provide some evidence that governments are capable of reducing income inequality despite countervailing behavioral responses. The effect is stronger for social expenditure policies than for progressive taxation. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 14-012.

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Date of creation: 2014
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Handle: RePEc:zbw:zewdip:14012

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Keywords: Inequality; Redistribution; Social Expenditure; Progressive Taxation;

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Inequality in OECD Countries
    by maximorossi in NEP-LTV blog on 2012-05-11 16:54:58
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Cited by:
  1. Kuhn, Andreas, 2012. "Redistributive Preferences, Redistribution, and Inequality: Evidence from a Panel of OECD Countries," IZA Discussion Papers 6721, Institute for the Study of Labor (IZA).
  2. Katrin Sommerfeld, 2012. "Higher and Higher?: Performance Pay and Wage Inequality in Germany," SOEPpapers on Multidisciplinary Panel Data Research 476, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Thibault Darcillon, 2012. "Do Interactions between Finance and Labor Market Institutions Affect Wage Distribution ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00768908, HAL.
  4. Töngür, Ünal & Elveren, Adem Yavuz, 2014. "Deunionization and pay inequality in OECD Countries: A panel Granger causality approach," Economic Modelling, Elsevier, Elsevier, vol. 38(C), pages 417-425.
  5. Andreas Kuhn, 2012. "Redistributive preferences, redistribution, and inequality: Evidence from a panel of OECD countries," ECON - Working Papers, Department of Economics - University of Zurich 084, Department of Economics - University of Zurich.
  6. Duca, John V. & Saving, Jason L., 2014. "Income Inequality and Political Polarization: Time Series Evidence Over Nine Decades," Working Papers, Federal Reserve Bank of Dallas 1408, Federal Reserve Bank of Dallas.
  7. Andreas Kuhn, 2012. "Redistributive Preferences, Redistribution and Inequality: Evidence from a Panel of OECD Countries," NRN working papers, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria 2012-08, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  8. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers, Directorate General Taxation and Customs Union, European Commission 38, Directorate General Taxation and Customs Union, European Commission.
  9. Thibault Darcillon, 2012. "Do Interactions between Finance and Labor Market Institutions Affect Wage Distribution?," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 12089, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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