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The distributional effects of tax-benefit policies under New Labour : a Shapley decomposition

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  • Olivier Bargain

Abstract

Using counterfactual microsimulations, Shapley decompositions of time change in inequality and poverty indices make it possible to disentangle and quantify the relative effect of tax-benefi?t policy changes, compared to all other effects including shifts in the distribution of market income. Using this approach also helps to clarify the different issues underlying the distributional evaluation of policy reforms. An application to the UK (1998-2001) con?firms previous fi?ndings that inequality and depth of poverty would have increased under the ?first New Labour government, had important reforms like the extensions of income support and tax credits not been implemented. These reforms have also contributed to substantially reduce poverty among families with children and pensioners.

Suggested Citation

  • Olivier Bargain, 2009. "The distributional effects of tax-benefit policies under New Labour : a Shapley decomposition," Working Papers 200907, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:200907
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    File URL: http://hdl.handle.net/10197/2604
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    References listed on IDEAS

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    Cited by:

    1. Eric Wong & Andrew Tsang & Steven Kong, 2016. "How Does Loan-To-Value Policy Strengthen Resilience of Banks to Property Price Shocks ¡V Evidence from Hong Kong," International Real Estate Review, Asian Real Estate Society, vol. 19(1), pages 120-149.
    2. John Creedy & Nicolas Hérault, 2011. "Decomposing Inequality and Social Welfare Changes: The Use of Alternative Welfare Metrics," Melbourne Institute Working Paper Series wp2011n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Eric Wong & Andrew Tsang & Steven Kong, 2014. "How Does Loan-To-Value Policy Strengthen Banks' Resilience to Property Price Shocks - Evidence from Hong Kong," Working Papers 032014, Hong Kong Institute for Monetary Research.
    4. Olivier Bargain, 2012. "Decomposition analysis of distributive policies using behavioural simulations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 708-731, October.

    More about this item

    Keywords

    Tax-benefit policy; Inequality; Poverty; Shapley decomposition; Microsimulation; Tax credits--Great Britain; Fiscal policy--Great Britain; Poverty--Great Britain; Income distribution--Great Britain;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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