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Mobility and the lifetime distributional impact of tax and transfer reforms

Author

Listed:
  • Peter Levell

    () (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Barra Roantree

    () (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Jonathan Shaw

    () (Institute for Fiscal Studies and Financial Conduct Authority)

Abstract

This paper examines the distributional impact of increases to out-of-work transfers, increases to work-contingent transfers, and increases in higher rates of income tax over the whole of life. We find that, in contrast to what is implied by 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. However, we find that higher rates of tax on annually assessed income are an effective way of targeting the lifetime rich, as incomes are more persistent towards the top of the distribution. Our results illustrate the importance of moving beyond an exclusively snapshot perspective when analysing tax and transfer reforms. This working paper is an updated version of W16/17.

Suggested Citation

  • Peter Levell & Barra Roantree & Jonathan Shaw, 2017. "Mobility and the lifetime distributional impact of tax and transfer reforms," IFS Working Papers W17/17, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:17/17
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    References listed on IDEAS

    as
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    Cited by:

    1. Charlotte Bartels & Dirk Neumann, 2018. "Redistribution and Insurance in Welfare States around the World," SOEPpapers on Multidisciplinary Panel Data Research 985, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    Keywords

    inequality; redistribution; income mobility; lifetime; tax and transfer reform;

    JEL classification:

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

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