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Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency

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  • Creedy, John

Abstract

This paper is concerned with comparisons between alternative tax and transfer systems. Using 'target efficiency' measures where the objective is the alleviation of poverty, means testing is preferred. However, the desire to reduce inequality usually leads to a preference for universal transfer systems such as the linear income tax. The present paper provides comparisons of social welfare (using an abbreviate welfare function) for schemes which imply the same degree of poverty (using several poverty measures). It was found that means-testing dominates if the headcount poverty measure is used, otherwise the linear tax dominates. Copyright 1996 by The London School of Economics and Political Science.

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  • Creedy, John, 1996. "Comparing Tax and Transfer Systems: Poverty, Inequality and Target Efficiency," Economica, London School of Economics and Political Science, vol. 63(250), pages 163-174, Suppl..
  • Handle: RePEc:bla:econom:v:63:y:1996:i:250:p:s163-74
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    Cited by:

    1. Christophe Muller & Sami Bibi, 2007. "Focused Targeting against Poverty Evidence from Tunisia," Working Papers DT/2007/07, DIAL (Développement, Institutions et Mondialisation).
    2. Denis Cogneau & Charlotte Guénard, 2005. "Colonization, Institutions, and Inequality: A Note on Some Suggestive Evidence," Ibero America Institute for Econ. Research (IAI) Discussion Papers 107, Ibero-America Institute for Economic Research.
    3. José-Manuel Giménez-Gómez & M. Marco-Gil, 2014. "A new approach for bounding awards in bankruptcy problems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 447-469, August.
    4. Francis Bloch & Vijayendra Rao & Sonalde Desai, 2004. "Wedding Celebrations as Conspicuous Consumption: Signaling Social Status in Rural India," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
    5. Christophe Muller, 2008. "Anti-Poverty Transfers without Riots in Tunisia," IDEP Working Papers 0801, Institut d'economie publique (IDEP), Marseille, France, revised Mar 2008.
    6. Christophe Muller, "undated". "Anti-Poverty Transfers without Riots in Tunisia," Discussion Papers 07/06, University of Nottingham, CREDIT.
    7. Duclos, Jean-Yves & Tabi, Martin, 1999. "Inégalité et redistribution du revenu, avec une application au Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 95-122, mars-juin.
    8. Jean-Yves Duclos, 2000. "Gini Indices and the Redistribution of Income," International Tax and Public Finance, Springer;International Institute of Public Finance, pages 141-162.
    9. Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, pages 109-140.
    10. Aya Abe, 2001. "Universalism and Targeting: An International Comparison using the LIS database," LIS Working papers 288, LIS Cross-National Data Center in Luxembourg.
    11. Bibi Sami, 2003. "On the Impact of Better Targeted Transfers on Poverty in Tunisia," Review of Middle East Economics and Finance, De Gruyter, vol. 1(1), pages 17-35, January.
    12. Christophe Muller, "undated". "Anti-Poverty Transfers and Spatial Prices in Tunisia," Discussion Papers 08/13, University of Nottingham, CREDIT.
    13. Rebekah Burroway & David Brady, 2010. "Targeting, Universalism and Single Mother Poverty: A Multi-level Analysis Across 18 Affluent Democracies," LIS Working papers 554, LIS Cross-National Data Center in Luxembourg.
    14. David S. Salkever & Stephen Johnston & Mustafa C. Karakus & Nicholas Ialongo & Eric Slade, 2006. "Using Target Efficiency to Select Program Participants and Risk-Factor Models: An Application to Child Mental Health Interventions for Preventing Future Crime," NBER Working Papers 12377, National Bureau of Economic Research, Inc.
    15. Hans Bloemen & Elena Stancanelli, 2007. "Modelling the employment and wage outcomes of spouses: is she outearning him?," Post-Print hal-01053593, HAL.
    16. Christophe Muller & Sami Bibi, 2006. "Focused Targeting against Poverty Evidence from Tunisia," IDEP Working Papers 0602, Institut d'economie publique (IDEP), Marseille, France, revised Apr 2006.
    17. Tom Kornstad & Thor O. Thoresen, 2004. "Means-Testing the Child Benefit," Review of Income and Wealth, International Association for Research in Income and Wealth, pages 29-49.
    18. Sami Bibi, 2001. "Comparing Effects of General Subsidies and Targeted Transfers on Poverty: Robustness Analysis Using Data Set from Tunisia," Working Papers 0125, Economic Research Forum, revised 09 Jun 2001.
    19. Tom Kornstad & Thor O. Thoresen, 1999. "Means-testing the Child Benefit," Discussion Papers 262, Statistics Norway, Research Department.
    20. Chatterji, Shurojit & Chattopadhyay, Subir, 2006. "Functional sunspot equilibria," Journal of Mathematical Economics, Elsevier, pages 22-35.
    21. David Brady & Rebekah Burroway, 2012. "Targeting, Universalism, and Single-Mother Poverty: A Multilevel Analysis Across 18 Affluent Democracies," Demography, Springer;Population Association of America (PAA), pages 719-746.
    22. Denise Doiron & Guyonne Kalb, 2005. "Demands for Child Care and Household Labour Supply in Australia," The Economic Record, The Economic Society of Australia, pages 215-236.
    23. Alari Paulus, 2016. "The antipoverty performance of universal and means-tested benefits with costly take-up," ImPRovE Working Papers 16/12, Herman Deleeck Centre for Social Policy, University of Antwerp.

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