Do poorer countries have less capacity for redistribution ?
Development aid and policy discussions often assume that poorer countries have less internal capacity for redistribution in favor of their poorest citizens. The assumption is tested using data for 90 developing countries. The capacity for redistribution is measured by the marginal tax rate on those who are not poor by rich-country standards that is needed to cover the poverty gap or to provide a poverty-level of basic income, judged by developing-country standards. For most (but not all) countries with annual consumption per capita under $2,000 (at 2005 purchasing power parity) the required tax burdens are found to be prohibitive-often calling for marginal tax rates of 100 percent or more. By contrast, the required tax rates are quite low (1 percent on average) among all countries with consumption per capita over $4,000, as well as some poorer countries. Most countries fall into one of two groups: those with little or no realistic prospect of addressing extreme poverty through redistribution from the"rich"and those that would appear to have ample scope for such redistribution. Economic growth tends to move countries from the first group to the second. Thus the appropriate balance between growth and redistribution strategies can be seen to depend on the level economic development.
|Date of creation:||01 Sep 2009|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
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.:
- Kanbur, Ravi & Mukherjee, Diganta, 2007.
"Poverty, Relative to the Ability to Eradicate It: An Index of Poverty Reduction Failure,"
126998, Cornell University, Department of Applied Economics and Management.
- Kanbur, Ravi & Mukherjee, Diganta, 2007. "Poverty, relative to the ability to eradicate it: An index of poverty reduction failure," Economics Letters, Elsevier, vol. 97(1), pages 52-57, October.
- Ravi Kanbur, 2006. "Poverty, Relative to the Ability to Eradicate It: An Index of Poverty Reduction Failure," Working Papers id:714, eSocialSciences.
- Norman Gemmell & Oliver Morrissey, 2005. "Distribution and Poverty Impacts of Tax Structure Reform in Developing Countries: How Little We Know," Development Policy Review, Overseas Development Institute, vol. 23(2), pages 131-144, 03.
- Anand, Sudhir, 1977. "Aspects of Poverty in Malaysia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(1), pages 1-16, March.
- Standing Guy, 2008. "How Cash Transfers Promote the Case for Basic Income," Basic Income Studies, De Gruyter, vol. 3(1), pages 1-30, July.
- Lant Pritchett, 2006. "Who is Not Poor? Dreaming of a World Truly Free of Poverty," World Bank Research Observer, World Bank Group, vol. 21(1), pages 1-23.
- Danziger, Sheldon & Gottschalk, Peter & Smolensky, Eugene, 1989. "How the Rich Have Fared, 1973-87," American Economic Review, American Economic Association, vol. 79(2), pages 310-14, May.
- Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, November.
- Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597, August.
- Marcelo Medeiros, 2006. "The Rich and the Poor: The Construction of an Affluence Line from the Poverty Line," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 78(1), pages 1-18, 08.
- Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
- Kakwani, Nanak C, 1977. "Measurement of Poverty and Negative-Income Tax," Australian Economic Papers, Wiley Blackwell, vol. 16(29), pages 237-48, December.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5046. 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: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.