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The distributional impact of the crisis in Greece

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  • Manos Matsaganis

    () (Athens University of Economics and Business)

  • Chrysa Leventi

    () (Athens University of Economics & Business)

Abstract

The severe economic crisis affecting Greece is widely expected to have a significant social impact in terms of greater inequality and increased poverty. We provide an early assessment of whether (and to what extent) this is the case. More specifically, we distinguish between two inter-related factors: on the one hand, the austerity measures taken to reduce fiscal deficits; on the other hand, the wider recession. Using the European tax-benefit model EUROMOD we attempt to quantify the distributional implications of both. With respect to the austerity measures, we focus on the changes introduced in spring 2010 in income tax, public sector pay and pension benefits. With respect to the wider recession, we attempt to estimate the distributional impact of the recent rise in unemployment by adjusting the model's input dataset in the light of recent Labour Force Survey data. We simulate the (ceteris paribus) impact of these changes on the distribution of incomes, while also estimating how the total burden of the crisis is shared across income groups, taking into account tax evasion and benefit non take up. We conclude by discussing the methodological pitfalls and policy implications of our research.

Suggested Citation

  • Manos Matsaganis & Chrysa Leventi, 2011. "The distributional impact of the crisis in Greece," DEOS Working Papers 1124, Athens University of Economics and Business.
  • Handle: RePEc:aue:wpaper:1124
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    References listed on IDEAS

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    1. André Decoster & Jason Loughrey & Cathal O'Donoghue & Dirk Verwerft, 2010. "How regressive are indirect taxes? A microsimulation analysis for five European countries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(2), pages 326-350.
    2. Kevin Featherstone, 2011. "The JCMS Annual Lecture: The Greek Sovereign Debt Crisis and EMU: A Failing State in a Skewed Regime," Journal of Common Market Studies, Wiley Blackwell, vol. 49(2), pages 193-217, March.
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    Citations

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    Cited by:

    1. Eirini Andriopoulou & Alexandros Karakitsios & Panos Tsakloglou, 2017. "Inequality and Poverty in Greece:Changes in Times of Crisis," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 116, Hellenic Observatory, LSE.
    2. Alari PaulusBy & Francesco Figari & Holly Sutherland, 2017. "The design of fiscal consolidation measures in the European Union: distributional effects and implications for macro-economic recovery," Oxford Economic Papers, Oxford University Press, vol. 69(3), pages 632-654.
    3. De Agostini, Paola & Paulus, Alari & Sutherland, Holly & Tasseva, Iva Valentinova, 2014. "The effect of tax-benefit changes on the income distribution in EU countries since the beginning of the economic crisis," EUROMOD Working Papers EM9/14, EUROMOD at the Institute for Social and Economic Research.
    4. Theodore Mitrakos, 2014. "Inequality, poverty and social welfare in Greece: distributional effects of austerity," Working Papers 174, Bank of Greece.
    5. Leventi, Chrysa & Matsaganis, Manos & Flevotomou, Maria, 2013. "Distributional implications of tax evasion and the crisis in Greece," EUROMOD Working Papers EM17/13, EUROMOD at the Institute for Social and Economic Research.
    6. Dimitris Kavroudakis & Dimitris Ballas & Vassilis Monastiriotis, 2013. "Exploring the geography of closing businesses in the crisis-stricken Athens city centre," ERSA conference papers ersa13p1078, European Regional Science Association.
    7. Manos Matsaganis & Chrysa Leventi & Maria Flevotomou, 2012. "The Crisis and Tax Evasion in Greece: What are the Distributional Implications?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 26-32, July.
    8. Atif Ansar & Bent Flyvbjerg & Alexander Budzier & Daniel Lunn, 2016. "Does infrastructure investment lead to economic growth or economic fragility? Evidence from China," Oxford Review of Economic Policy, Oxford University Press, vol. 32(3), pages 360-390.
    9. Tsatsos, Aristidis, 2011. "Working in Southern Europe in Times of Crisis – Myths and Demons," MPRA Paper 45237, University Library of Munich, Germany, revised Jul 2011.
    10. Panagiotis ARTELARIS & George KANDYLIS, 2014. "Mapping Poverty At Regional Level In Greece," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 131-147.
    11. Michał Brzeziński, 2015. "Inequality of opportunity in Europe before and after the Great Recession," Working Papers 2015-02, Faculty of Economic Sciences, University of Warsaw.
    12. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.
    13. De Agostini, Paola & Paulus, Alari & Tasseva, Iva Valentinova, 2015. "The effect of tax-benefit changes on the income distribution in 2008-2014," EUROMOD Working Papers EM11/15, EUROMOD at the Institute for Social and Economic Research.

    More about this item

    Keywords

    Austerity; Greece; inequality; poverty; microsimulation;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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