IDEAS home Printed from https://ideas.repec.org/p/inq/inqwps/ecineq2021-593.html
   My bibliography  Save this paper

Redistribution across Europe: How much and to whom?

Author

Listed:
  • Bernhard Hammer

    (TU Wien)

  • Michael Christl

    (JRC Seville)

  • Silvia De Poli

    (JRC Seville)

Abstract

Governments face a potential trade-off between provision for the growing population in retirement and the support of working-age households with low income. Using EUROMOD-based microdata from 28 countries, we (a) quantify the redistribution to the pensioner and non-pensioner populations, (b) study the position of net beneficiaries in the overall income distribution and (c) analyse how taxes and benefits affect the working-age population with low income. Our results provide novel insights into the distributive role of tax-benefit systems across Europe. Interestingly, a strong overall redistribution between households is associated with generous pensions for a portion of the retirees but negatively related to support for low-income households.

Suggested Citation

  • Bernhard Hammer & Michael Christl & Silvia De Poli, 2020. "Redistribution across Europe: How much and to whom?," Working Papers 593, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2021-593
    as

    Download full text from publisher

    File URL: http://www.ecineq.org/milano/WP/ECINEQ2021-593.pdf
    File Function: First version, 2021
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bernhard Hammer & Sonja Spitzer & Alexia Prskawetz, 2022. "Age-Specific Income Trends in Europe: The Role of Employment, Wages, and Social Transfers," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(2), pages 525-547, July.
    2. Silvia Avram & Horacio Levy & Holly Sutherland, 2014. "Income redistribution in the European Union," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-29, December.
    3. David K. Jesuit & Vincent A. Mahler, 2010. "Comparing Government Redistribution Across Countries: The Problem of Second-Order Effects," Social Science Quarterly, Southwestern Social Science Association, vol. 91(s1), pages 1390-1404.
    4. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    5. Vincent Mahler & David Jesuit, 2010. "Comparing Government Redistribution across Countries: The Problem of Second-order Effects," LIS Working papers 546, LIS Cross-National Data Center in Luxembourg.
    6. M. Collado & Iñigo Iturbe-Ormaetxe, 2010. "Public transfers to the poor: is Europe really much more generous than the United States?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(6), pages 662-685, December.
    7. Rani, Uma. & Furrer, Marianne., 2016. "Decomposing income inequality into factor income components : evidence from selected G20 countries," ILO Working Papers 994934893302676, International Labour Organization.
    8. Peter J. Lambert & Runa Nesbakken & Thor O. Thoresen, 2020. "A Common Base Answer to the Question “Which Country Is Most Redistributive?”," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(4), pages 1467-1479, October.
    9. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    10. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Has the redistributive effect of social transfers and taxes changed over time across countries?," International Social Security Review, John Wiley & Sons, vol. 72(1), pages 3-31, January.
    11. David K. Jesuit & Vincent A. Mahler, 2010. "Comparing Government Redistribution Across Countries: The Problem of Second‐Order Effects," Social Science Quarterly, Southwestern Social Science Association, vol. 91(5), pages 1390-1404, December.
    12. Julia Lynch, 2001. "The Age-Orientation of Social Policy Regimes in OECD Countries," LIS Working papers 308, LIS Cross-National Data Center in Luxembourg.
    13. Christl, Michael & Köppl–Turyna, Monika & Lorenz, Hanno & Kucsera, Dénes, 2020. "Redistribution within the tax-benefits system in Austria," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 250-264.
    14. Tingyun Chen & Mr. Jean-Jacques Hallaert & Mr. Alexander Pitt & Mr. Haonan Qu & Mr. Maximilien Queyranne & Ms. Alaina P Rhee & Ms. Anna Shabunina & Mr. Jerome Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 2018/001, International Monetary Fund.
    15. Pieter Vanhuysse & Marton Medgyesi & Robert I Gal, 2021. "Welfare states as lifecycle redistribution machines: Decomposing the roles of age and socio-economic status shows that European tax-and-benefit systems primarily redistribute across age groups," PLOS ONE, Public Library of Science, vol. 16(8), pages 1-18, August.
    16. Dardanoni, Valentino & Lambert, Peter J., 2002. "Progressivity comparisons," Journal of Public Economics, Elsevier, vol. 86(1), pages 99-122, October.
    17. Axel Pedersen, 1994. "The Welfare State and Inequality: Still No Answers to the Big Questions," LIS Working papers 109, LIS Cross-National Data Center in Luxembourg.
    18. Louis Chauvel & Martin Schr der, 2014. "Generational Inequalities and Welfare Regimes," LIS Working papers 606, LIS Cross-National Data Center in Luxembourg.
    19. Tingyun Chen & Jean-Jacques Hallaert & Alexander Pitt & Haonan Qu & Maximilien Queyranne & Alaina Rhee & Anna Shabunina & Jérôme Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 18/01, International Monetary Fund.
    20. Rani, Uma. & Furrer, Marianne., 2016. "Decomposing income inequality into factor income components evidence from selected G20 countries," ILO Working Papers 994930893002676, International Labour Organization.
    21. Joakim Palme & Walter Korpi, 1998. "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries," LIS Working papers 174, LIS Cross-National Data Center in Luxembourg.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wroński, Marcin, 2023. "The impact of social security wealth on the distribution of wealth in the European Union," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hammer, Bernhard & Christl, Michael & De Poli, Silvia, 2023. "Public redistribution in Europe: Between generations or income groups?," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    2. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Income Inequality and Fiscal Redistribution in 31 Countries After the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 119-148, March.
    3. Elvire Guillaud & Matthew Olckers & Michaël Zemmour, 2020. "Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 444-466, June.
    4. Malte Luebker, 2014. "Income Inequality, Redistribution, and Poverty: Contrasting Rational Choice and Behavioral Perspectives," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 133-154, March.
    5. Federico Podestà & Sonia Marzadro, 2017. "Operationalizing De-commodification and De-familization Outcomes via the Relative Poverty Approach: An Application to Western European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(2), pages 701-726, March.
    6. Luca Giangregorio, 2024. "Welfare type and income inequality: an income source decomposition including in-kind benefits and cash-transfers entitlement," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(2), pages 367-403, April.
    7. IVASKAITE-TAMOSIUNE Viginta & THIEMANN Andreas, 2021. "The budgetary and redistributive impact of pension taxation in the EU: A microsimulation analysis," JRC Working Papers on Taxation & Structural Reforms 2021-08, Joint Research Centre.
    8. Orsetta Causa & Mikkel Hermansen, 2017. "Income redistribution through taxes and transfers across OECD countries," OECD Economics Department Working Papers 1453, OECD Publishing.
    9. Schaffrin, André & Reibling, Nadine, 2015. "Household energy and climate mitigation policies: Investigating energy practices in the housing sector," Energy Policy, Elsevier, vol. 77(C), pages 1-10.
    10. Anton I. Votinov & Samvel S. Lazaryan & Vyacheslav N. Ovchinnikov, 2019. "Regression-Based Decomposition of Income Inequality Factors in Russia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 74-89, October.
    11. Nelson R. Ramírez- Rondán & Marco E. Terrones & Diego Winkelried, 2020. "Equalizing growth: The case of Peru," Working Papers 176, Peruvian Economic Association.
    12. SOLOGON Denisa & ALMEIDA Vanda & VAN KERM Philippe, 2019. "Accounting for the distributional effects of the 2007-2008 crisis and the Economic Adjustment Program in Portugal," LISER Working Paper Series 2019-05, Luxembourg Institute of Socio-Economic Research (LISER).
    13. Gerlinde Verbist & Ron Diris & Frank Vandenbroucke, 2018. "Solidarity between generations in extended families. Direction, size and intensity," Working Papers 1816, Herman Deleeck Centre for Social Policy, University of Antwerp.
    14. Uma Rani & Jaya Krishnakumar & Maurizio Bigotta, 2017. "Accounting for income inequality: empirical evidence from India," Indian Economic Review, Springer, vol. 52(1), pages 193-229, December.
    15. Malte Luebker, 2014. "Income Inequality, Redistribution, and Poverty: Contrasting Rational Choice and Behavioral Perspectives," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 133-154, March.
    16. Muszyńska Joanna & Oczki Jarosław & Wędrowska Ewa, 2018. "Income Inequality in Poland and the United Kingdom. Decomposition of the Theil Index," Folia Oeconomica Stetinensia, Sciendo, vol. 18(1), pages 108-122, June.
    17. Solt, Frederick, 2019. "Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database," SocArXiv mwnje, Center for Open Science.
    18. Coady, David & D’Angelo, Devin & Evans, Brooks, 2020. "Fiscal redistribution and social welfare: doing more or more to do?," EUROMOD Working Papers EM10/20, EUROMOD at the Institute for Social and Economic Research.
    19. Nerijus Cerniauskas & Denisa M. Sologon & Cathal O’Donoghue & Linas Tarasonis, 2020. "Changes in income inequality in Lithuania: the role of policy, labour market structure, returns and demographics," Bank of Lithuania Working Paper Series 71, Bank of Lithuania.
    20. Orsetta Causa & Mikkel Hermansen, 2018. "Income Redistribution Through Taxes and Transfers across OECD Countries," LIS Working papers 729, LIS Cross-National Data Center in Luxembourg.

    More about this item

    Keywords

    Redistribution; Welfare state; Inequality; Microsimulation; EUROMOD;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2021-593. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maria Ana Lugo (email available below). General contact details of provider: https://edirc.repec.org/data/ecineea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.