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Income Redistribution and Poverty Reduction in Latin America: The role of social spending and taxation in achieving development goals

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  • Nora Lustig

Abstract

How much do social spending and taxation contribute to achieving the goals of poverty reduction and expanding the access to education and health services among the poor? Standard fiscal incidence analyses applied to Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay using a comparable methodology yields the following results. Direct taxes and cash transfers reduce inequality and poverty by non-trivial amounts in Argentina, Brazil, and Uruguay but less so in Bolivia, Mexico, and Peru. In Bolivia and Brazil indirect taxes more than offset the poverty-reducing impact of cash transfers. When one includes the effect of in-kind transfers in education and health valued at government costs, they reduce inequality in all countries by considerably more than cash transfers. Spending on public education and health services is broadly pro-poor, with the exception of tertiary education and the health component of the social security system.

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  • Nora Lustig, 2014. "Income Redistribution and Poverty Reduction in Latin America: The role of social spending and taxation in achieving development goals," Development, Palgrave Macmillan;Society for International Deveopment, vol. 57(3-4), pages 388-399, December.
  • Handle: RePEc:pal:develp:v:57:y:2014:i:3-4:p:388-399
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