IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The decomposition of the redistributive effect into vertical effect, horizontal effect and reranking: the state of the art and the application to the Italian case

Listed author(s):
  • Pellegrino Simone
  • Vernizzi Achille

Recently van De Van, Creedy and Lambert (2001) and Urban and Lambert (2008) have reconsidered the original Aronson, Johnson and Lambert (1994) decomposition of the redistributive effect in order to identify the optimal bandwidth that should be used in decomposing the redistributive effect, when groups with close pre-tax incomes are considered. The methodology proposed by van De Van, Creedy and Lambert (2001) suggests choosing as the optimal bandwidth the one which maximizes the ratio between the potential effect V (which depends on the bandwidth) and the actual redistributive effect RE (which is invariant). Urban and Lambert (2008) discuss a set of further possible decompositions of the redistributive effect together with a decomposition of the Atkinson-Plotnick-Kakwani index into three terms. Making use of a microsimulation model based on microdata provided by the Bank of Italy in its Survey on Households Income and Wealth in the year 2006, in this paper we investigate the three most important decompositions of the redistributive effect applied to the 2006 and 2007 Italian personal income tax. Moreover, we throw some more light on the behavior of these decompositions in order to look for criteria to choose a bandwidth which allows the three different definitions of potential redistributive effect to assume values which can be as coherent as possible, and, in the meanwhile, to catch as much as possible of the potential vertical effect. We suggest looking for the bandwidth where the ratio between the maximum distance among the different potential vertical effect definitions and the minimum among the different potential vertical effects is minimum.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers

File URL:
Download Restriction: no

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Società editrice il Mulino in its journal Politica economica.

Volume (Year): (2011)
Issue (Month): 1 ()
Pages: 25-48

in new window

Handle: RePEc:mul:je8794:doi:10.1429/34352:y:2011:i:1:p:25-48
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mul:je8794:doi:10.1429/34352:y:2011:i:1:p:25-48. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.