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Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers

Author

Listed:
  • Ali Enami

    (Tulane University and CEQ Institute.)

  • Nora Lustig

    (Stone Center for Latin American Studies, Department of Economics, Tulane University, Commitment to Equity Institute (CEQI). Tulane University.)

  • Rodrigo Aranda

    (Tulane University and CEQ Institute.)

Abstract

This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.

Suggested Citation

  • 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.
  • Handle: RePEc:tul:ceqwps:25
    as

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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq25.pdf
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    References listed on IDEAS

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    9. Anthony Shorrocks, 2013. "Decomposition procedures for distributional analysis: a unified framework based on the Shapley value," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 99-126, March.
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    Cited by:

    1. Martinez Aguilar,Sandra Natalia & Fuchs Tarlovsky,Alan & Ortiz-Juarez,Eduardo & Del Carmen Hasbun,Giselle Eugenia, 2017. "The impact of fiscal policy on inequality and poverty in Chile," Policy Research Working Paper Series 7939, The World Bank.
    2. Nora Lustig, 2020. "Inequality and Social Policy in Latin America," Commitment to Equity (CEQ) Working Paper Series 94, Tulane University, Department of Economics.
    3. Shamma A. Alam & Gabriela Inchauste & Umar Serajuddin, 2017. "The Distributional Impact of Fiscal Policy in Jordan," Commitment to Equity (CEQ) Working Paper Series 44, Tulane University, Department of Economics.
    4. Nora Lustig, 2020. "Inequality and Social Policy in Latin America," Working Papers 2011, Tulane University, Department of Economics.
    5. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 54, Tulane University, Department of Economics.
    6. Nora Lustig, 2016. "Fiscal policy, inequality and the poor in the developing world," Working Papers 418, ECINEQ, Society for the Study of Economic Inequality.
    7. Ali Enami, 2016. "An Application of the CEQ Effectiveness Indicators: The Case of Iran," Commitment to Equity (CEQ) Working Paper Series 58, Tulane University, Department of Economics.
    8. Stephen D. Younger & Artsvi Khachatryan, 2017. "Fiscal Incidence in Armenia," Commitment to Equity (CEQ) Working Paper Series 43, Tulane University, Department of Economics.
    9. Stephen D. Younger & Eric Osei-Assibey & Felix Oppong, 2017. "Fiscal Incidence in Ghana," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 47-66, November.

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