Fiscal Incidence, Fiscal Mobility and the Poor: a New Approach
Taxes and transfers can have significant impacts on poverty and inequality. All standard measures are by definition anonymous in the sense that we do not know the identity of winners and losers. That a given combination of taxes and transfers makes some of the poor poorer, however, may be important information to incorporate into a fiscal incidence analysis. The directional mobility literature provides a useful framework to identify which individuals are adversely/favorably impacted by a particular policy. This paper introduces a “fiscal mobility matrix” to identify winners and losers. We show that taxes and transfers can lower inequality and poverty (including the severity of poverty) but still make a subgroup of the poor worse off. We use Brazilian data to illustrate how indirect taxes make around 11 percent of the non-poor poor, 15 percent of the moderate poor extremely poor, and 4 percent of the extremely poor “ultra-poor” despite any cash transfers they receive, even when standard poverty and inequality indicators decline and overall taxes are progressive.
|Date of creation:||Sep 2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.ecineq.org|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2011.
"A vulnerability approach to the definition of the middle class,"
Policy Research Working Paper Series
5902, The World Bank.
- Luis López-Calva & Eduardo Ortiz-Juarez, 2014. "A vulnerability approach to the definition of the middle class," Journal of Economic Inequality, Springer, vol. 12(1), pages 23-47, March.
- Nora Lustig, 2011.
"Fiscal policy and income redistribution in Latin America: Challenging the conventional wisdom,"
227, ECINEQ, Society for the Study of Economic Inequality.
- Nora Lustig & Carola Pessino & George Gray Molina & Wilson Jimenez & Veronica Paz & Ernesto Yanez & Claudiney Pereira & Sean Higgins & John Scott & Miguel Jaramillo, 2011. "Fiscal Policy and Income Redistribution in Latin America: Challenging the Conventional Wisdom," Working Papers 1124, Tulane University, Department of Economics.
- François Bourguignon, 2011. "Non-anonymous growth incidence curves, income mobility and social welfare dominance," Journal of Economic Inequality, Springer, vol. 9(4), pages 605-627, December.
- François Bourguignon, 2011. "Status Quo In The Welfare Analysis Of Tax Reforms," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 603-621, December.
When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2012-265. 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: (Maria Ana Lugo)
If references are entirely missing, you can add them using this form.