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A Comparison of the Poverty Impact of Transfers, Taxes and Market Income across Five OECD Countries

Author

Listed:
  • Bibi, Sami

    (Policy and Economic Poverty Network)

  • Duclos, Jean-Yves

    (Université Laval)

Abstract

This paper compares the poverty reduction impact of income sources, taxes and transfers across five OECD countries. Since the estimation of that impact can depend on the order in which the various income sources are introduced into the analysis, it is done by using the Shapley value. Estimates of the poverty reduction impact are presented in a normalized and un-normalized fashion, in order to take into account the total as well as the per dollar impacts. The methodology is applied to data from the Luxembourg Income Study (LIS) database.

Suggested Citation

  • Bibi, Sami & Duclos, Jean-Yves, 2008. "A Comparison of the Poverty Impact of Transfers, Taxes and Market Income across Five OECD Countries," IZA Discussion Papers 3824, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3824
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    References listed on IDEAS

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    1. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 4.
    2. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
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    4. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657, Elsevier.
    5. Zheng, Buhong, 1997. "Aggregate Poverty Measures," Journal of Economic Surveys, Wiley Blackwell, vol. 11(2), pages 123-162, June.
    6. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 3.
    7. Buhong Zheng, 1997. "Aggregate Poverty Measures," Journal of Economic Surveys, Wiley Blackwell, vol. 11(2), pages 123-162, June.
    8. Paul Makdissi & Quentin Wodon, 2004. "Measuring Poverty Reduction and Targeting Performance Under Multiple Government Programs," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 573-582, November.
    9. Makdissi, Paul & Therrien, Yannick & Wodon, Quentin, 2006. "L’impact des transferts publics et des taxes sur la pauvreté au Canada et aux États-Unis," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(3), pages 377-394, septembre.
    10. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    11. Timothy Smeeding, 2006. "Poor People in Rich Nations: The United States in Comparative Perspective," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 69-90, Winter.
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    Citations

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    Cited by:

    1. Guillaume Allegre, 2012. "Work, Family or State? From wage inequalities to standard of living inequalities and inwork poverty in a European cross-country perspective," Working Papers hal-01070340, HAL.
    2. repec:hal:spmain:info:hdl:2441/c6t1fl36hv9s7q89j8m8gcgk9 is not listed on IDEAS
    3. Luis Huesca & Abdelkrim Araar, 2014. "Progressivity of Taxes and Transfers: the Mexican Case 2012," Cahiers de recherche 1407, CIRPEE.
    4. Nora Lustig, 2019. "Measuring the Distributional Impact of Taxation and Public Spending: The Practice of Fiscal Incidence Analysis," Commitment to Equity (CEQ) Working Paper Series 24, Tulane University, Department of Economics.
    5. Michal Brzezinski, 2011. "Accounting for recent trends in absolute poverty in Poland: a decomposition analysis," Post-Communist Economies, Taylor & Francis Journals, vol. 24(4), pages 465-475, December.
    6. Guillaume Allègre, 2012. "Work, family or state ? from wage inequalitie ans in-work poverty in a european cross-country perspective," Documents de Travail de l'OFCE 2012-12, Observatoire Francais des Conjonctures Economiques (OFCE).
    7. Sami Bibi & AbdelRahmen El-Lahga, 2011. "A Unified Framework to Decomposing Inequality with Illustrations to Some Arab Countries," Working Papers 618, Economic Research Forum, revised 08 Jan 2011.
    8. Luis Huesca, 2017. "Income redistribution and inequality in the Mexican tax-benefit system," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 36(72), October.
    9. repec:spo:wpecon:info:hdl:2441/c6t1fl36hv9s7q89j8m8gcgk9 is not listed on IDEAS
    10. Luis Huesca & Arturo Robles Valencia & Abdelkrim Araar, 2015. "Progressivity and decomposition of VAT in the Mexican border, 2014," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de Trabajo de la Universidad Autónoma de Ciudad Juárez. 25, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 01 Jan 2015.
    11. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152.
    12. Luis Huesca & Linda Llamas, 2016. "Testing for Pro-Poorness of Growth through the Tax System: The Mexican Case," Journal of Reviews on Global Economics, Lifescience Global, vol. 5, pages 101-115.
    13. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 25, Tulane University, Department of Economics.
    14. Biscione Antonella & de Felice Annunziata & Martucci Isabella, 2018. "Decomposition of Poverty Change: a Case Study," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 8(3), pages 1-4.
    15. Sami Bibi & Abdelrahmen El Lahga, 2011. "Decomposing Monetary Inequality In The Arab Region," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 99-117.
    16. Ali Enami & Nora Lustig & Rodrigo Aranda, 2016. "Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers," Commitment to Equity (CEQ) Working Paper Series 1325, Tulane University, Department of Economics.
    17. Sami Bibi & AbdelRahmen El-Lahga, 2010. "Decomposing Income Inequality in The Arab Region," Working Papers 557, Economic Research Forum, revised 10 Jan 2010.
    18. repec:hal:wpspec:info:hdl:2441/c6t1fl36hv9s7q89j8m8gcgk9 is not listed on IDEAS
    19. Luis A. Hierro & Rosario Gómez-Alvarez & Pedro Atienza, 2012. "The Contribution of US Taxes and Social Transfers to Income Redistribution," Public Finance Review, , vol. 40(3), pages 381-400, May.

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    More about this item

    Keywords

    Shapley value; poverty reduction; transfers; taxes; OECD countries;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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