Household Incomes and Redistribution in the European Union: Quantifying the Equalising Properties of Taxes and Benefits
The systems of direct taxes and cash benefits in the Member States of the European Union vary considerably in size and structure. We explore their direct impacts on cross-sectional income inequality (termed "redistributive effect" for the purpose of this paper) using EUROMOD, a tax-benefit microsimulation model for the European Union. This relies on harmonised household micro-data representative of each national population together with simulations of entitlements to cash benefits and liabilities for taxes and social contributions. It allows us to draw a more comprehensive – and comparable – picture of the combined effects of transfers and taxes than is usually possible. We decompose the redistributive effect of tax-benefit systems to assess and compare the effectiveness of individual policies at reducing income disparities. The following categories of benefits and taxes are considered both individually and in combination: income taxes, social contributions, cash benefits designed to target the poor or redistribute inter-personally (through means-testing) as well as cash benefits intended to redistribute intra-personally across the lifecycle (through social insurance or contingency-based entitlement). We derive results for the 15 "old" members of the European Union and present them for each country separately as well as for the EU-15 as a whole.
|Date of creation:||Oct 2005|
|Date of revision:|
|Publication status:||published in: Papadimitriou, D.B. (ed.), The Distributional Effects of Government Spending and Taxation, Palgrave MacMillan 2006|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
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.:
- Heady, Christopher & Mitrakos, Theodore & Tsakloglou, Panos, 2001.
"The Distributional Impact of Social Transfers in the European Union: Evidence from the ECHP,"
IZA Discussion Papers
356, Institute for the Study of Labor (IZA).
- Christopher Heady & Theodore Mitrakos & Panos Tsakloglou, 2001. "The distributional impact of social transfers in the European Union: evidence from the ECHP," Fiscal Studies, Institute for Fiscal Studies, vol. 22(4), pages 547-565., December.
- Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
- Boadway, Robin & Keen, Michael, 2000.
Handbook of Income Distribution,
in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 12, pages 677-789
- Duclos, Jean-Yves, 1993.
"Progressivity, Redistribution, and Equity, with Application to the British Tax and Benefit System,"
Public Finance = Finances publiques,
, vol. 48(3), pages 350-65.
- DUCLOS, Jean-Yves, 1994. "Progressivity, Redistribution and Equity, with Application to the British Tax and Benefit System," Cahiers de recherche 9403, Université Laval - Département d'économique.
- Jean-Marc Burniaux & Thai-Thanh Dang & Douglas Fore & Michael F. Förster & Marco Mira d'Ercole & Howard Oxley, 1998. "Income Distribution and Poverty in Selected OECD Countries," OECD Economics Department Working Papers 189, OECD Publishing.
- Berglas, Eitan, 1971. "Income Tax and the Distribution of Income: An International Comparison," Public Finance = Finances publiques, , vol. 26(4), pages 532-45.
- Whitehouse, Edward, 2000.
"How poor are the old? a survey of evidence from 44 countries,"
Social Protection Discussion Papers
23141, The World Bank.
- Whitehouse, Edward, 2000. "How Poor are the Old? A Survey of Evidence from 44 Countries," MPRA Paper 14177, University Library of Munich, Germany.
- Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G. & Gerfin, Michael & Gross, Lorna & Hakinnen, Unto, 1999. "Redistributive effect, progressivity and differential tax treatment: Personal income taxes in twelve OECD countries," Journal of Public Economics, Elsevier, vol. 72(1), pages 73-98, April.
- Zandvakili, Sourushe, 1994. "Income Distribution and Redistribution through Taxation: An International Comparison," Empirical Economics, Springer, vol. 19(3), pages 473-91.
- Sutherland, Holly & Immervoll, Herwig & O'Donoghue, Cathal, 1999. "An introduction to EUROMOD," EUROMOD Working Papers EM0/99, EUROMOD at the Institute for Social and Economic Research.
- Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
- Mantovani, Daniela & Sutherland, Holly, 2003. "Social indicators and other income statistics using the EUROMOD baseline: a comparison with Eurostat and National Statistics," EUROMOD Working Papers EM1/03, EUROMOD at the Institute for Social and Economic Research.
- Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-28, October.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp1824. 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: (Mark Fallak)
If references are entirely missing, you can add them using this form.