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Mobility and the lifetime distributional impact of tax and transfer reforms

Author

Listed:
  • Peter Levell

    (Institute for Fiscal Studies)

  • Barra Roantree

    (Economic and Social Research Institute
    Trinity College Dublin)

  • Jonathan Shaw

    (Financial Conduct Authority)

Abstract

This paper examines the lifetime distributional impact of changes to the tax and transfer system. We find that—in contrast to standard snapshot analyses—increases to work-contingent benefits are just as effective at redistributing resources to the lifetime poor as increases to out-of-work benefits. This has important implications for the equity-efficiency trade-off typically thought to apply to work-contingent transfers. We also show that increases to higher rates of income tax are an effective way of targeting the lifetime rich because higher earners tend to exhibit greater persistence in their incomes. Our results illustrate the importance that moving beyond an exclusively snapshot perspective can have when analysing tax and transfer reforms.

Suggested Citation

  • Peter Levell & Barra Roantree & Jonathan Shaw, 2021. "Mobility and the lifetime distributional impact of tax and transfer reforms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(4), pages 751-793, August.
  • Handle: RePEc:kap:itaxpf:v:28:y:2021:i:4:d:10.1007_s10797-020-09627-0
    DOI: 10.1007/s10797-020-09627-0
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    Cited by:

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    3. Julio López Laborda & Carmen Marín & Jorge Onrubia, 2021. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles. Sexto informe – 2017 y 2018," Studies on the Spanish Economy eee2021-33, FEDEA.
    4. Brewer, Mike & Joyce, Robert & Waters, Tom & Woods, Joseph, 2020. "A method for decomposing the impact of reforms on the long-run income distribution, with an application to universal credit," Economics Letters, Elsevier, vol. 192(C).

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    More about this item

    Keywords

    Inequality; Redistribution; Income mobility;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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