The distributional impact of the crisis in Greece
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.
|Date of creation:||20 May 2011|
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- 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.
- 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, 03.
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