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The Incidence of Social Spending and Taxes in Peru

Author

Listed:
  • Miguel Jaramillo Baanante

    (Group of the Analysis of Development GRADE)

Abstract

Standard tax and benefit incidence analysis is used to estimate the effects of fiscal policy on poverty and inequality in Peru. Results suggest that the extent of inequality and poverty reduction induced by Peru’s fiscal policy is small. Results also suggest that the small impact is associated with low social spending rather than with inefficient spending. Most social spending components are progressive and overall social spending is also progressive. We find that direct cash transfers are well targeted and are especially effective in reducing extreme poverty. We also find that in-kind transfers are effective in reducing inequality. Finally, direct and indirect taxes have a positive, though small, effect on inequality.

Suggested Citation

  • Miguel Jaramillo Baanante, 2013. "The Incidence of Social Spending and Taxes in Peru," Commitment to Equity (CEQ) Working Paper Series 09, Tulane University, Department of Economics.
  • Handle: RePEc:tul:ceqwps:09
    as

    Download full text from publisher

    File URL: http://repec.tulane.edu/RePEc/ceq/ceq09.pdf
    File Function: First version, 2013
    Download Restriction: no

    References listed on IDEAS

    as
    1. Lustig, Nora & Gray Molina, George & Higgins, Sean & Jaramillo, Miguel & Jiménez, Wilson & Paz, Verónica & Pereira, Claudiney & Pessino, Carola & Scott, John & Yáñez, Ernesto, 2012. "The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico and Peru: a synthesis of results," Research Department working papers 234, CAF Development Bank Of Latinamerica.
    2. Nora Lustig & Carola Pessino & John Scott, 2014. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay," Public Finance Review, , vol. 42(3), pages 287-303, May.
    3. Inchauste, Gabriela & Olivieri, Sergio & Saavedra, Jaime & Winkler, Hernan, 2012. "What is behind the decline in poverty since 2000 ? evidence from Bangladesh, Peru and Thailand," Policy Research Working Paper Series 6199, The World Bank.
    4. John Scott, 2014. "Redistributive Impact and Efficiency of Mexico’s Fiscal System," Public Finance Review, , vol. 42(3), pages 368-390, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    social spending; inequality; poverty; taxes; Peru;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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