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Tax burden, government expenditures and income distribution in Brazil

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  • Baer, Werner
  • Galvão Jr., Antonio Fialho

Abstract

This article attempts to explain the seeming paradox of a country with a high tax burden and a continually concentrated distribution of income. By means of a structural quantile regression model we analyze the distributional impact of government expenditures on the Gini index, and it is shown that Brazil's redistribution expenditures has a relatively smaller impact for low quantiles of the conditional distribution of income inequality. It is also noted that both the country's tax and expenditure structure are, in part, responsible for the country's continuous concentration of income.

Suggested Citation

  • Baer, Werner & Galvão Jr., Antonio Fialho, 2008. "Tax burden, government expenditures and income distribution in Brazil," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 345-358, May.
  • Handle: RePEc:eee:quaeco:v:48:y:2008:i:2:p:345-358
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    References listed on IDEAS

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    1. Andrew Chesher, 2003. "Identification in Nonseparable Models," Econometrica, Econometric Society, vol. 71(5), pages 1405-1441, September.
    2. Amemiya, Takeshi, 1982. "Two Stage Least Absolute Deviations Estimators," Econometrica, Econometric Society, vol. 50(3), pages 689-711, May.
    3. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    4. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, vol. 70(1), pages 91-117, January.
    5. Ma, Lingjie & Koenker, Roger, 2006. "Quantile regression methods for recursive structural equation models," Journal of Econometrics, Elsevier, vol. 134(2), pages 471-506, October.
    6. Edmund Amann & Werner Baer, 2006. "Economic Orthodoxy Versus Social Development? The Dilemmas Facing Brazil's Labour Government," Oxford Development Studies, Taylor & Francis Journals, vol. 34(2), pages 219-241.
    7. Hoffmann, Rodolfo, 2003. "Inequality in Brazil: The Contribution of Pensions," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 57(4), October.
    8. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    9. Benedict J. Clements, 1997. "Income Distribution and Social Expenditure in Brazil," IMF Working Papers 97/120, International Monetary Fund.
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    Cited by:

    1. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.
    2. Goñi, Edwin & Humberto López, J. & Servén, Luis, 2011. "Fiscal Redistribution and Income Inequality in Latin America," World Development, Elsevier, vol. 39(9), pages 1558-1569, September.
    3. Higgins, Sean & Lustig, Nora, 2016. "Can a poverty-reducing and progressive tax and transfer system hurt the poor?," Journal of Development Economics, Elsevier, vol. 122(C), pages 63-75.
    4. Marina Malkina & Rodion Balakin, 2015. "Correlation Assessment of Tax System Risk and Profitability in the Russian Regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 241-255.
    5. Sean Higgins & Nora Lustig, 2015. "Can Poverty-Reducing and Progressive Tax and Transfer System Hurt the Poor?," Commitment to Equity (CEQ) Working Paper Series 1333, Tulane University, Department of Economics.

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