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Assessing the Effects of Fiscal Policies on Poverty and Inequality : The Case of Uruguay

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  • Bucheli,Marisa
  • Lara Ibarra,Gabriel
  • Tuzman Fernandez,Diego

Abstract

This study looks at the redistributive effects of fiscal policy -- in particular of direct taxation and expenditures -- in Uruguay. This fiscal incidence analysis applies a widely recognized methodology to household survey data and government data for fiscal year 2017 and compares the results with the policies seen in 2009 to study the evolution of the distributional impacts of fiscal policy in the country. The study finds evidence that Uruguayan fiscal policy continues to reduce inequality, with government expenditures in the form of in-kind transfers leading to the largest decreases. While expenditures in basic education are benefitting the poorest, expenditures in tertiary education remain largely regressive. The personal income tax is found to be largely progressive, with the top quintile paying more than four-fifths of this tax. Uruguay’s fiscal policies also lead to a reduction in poverty, mainly due to well-targeted direct transfers.

Suggested Citation

  • Bucheli,Marisa & Lara Ibarra,Gabriel & Tuzman Fernandez,Diego, 2020. "Assessing the Effects of Fiscal Policies on Poverty and Inequality : The Case of Uruguay," Policy Research Working Paper Series 9499, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9499
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    References listed on IDEAS

    as
    1. Marisa Bucheli & Nora Lustig & Máximo Rossi & Florencia Amábile, 2014. "Social Spending, Taxes, and Income Redistribution in Uruguay," Public Finance Review, , vol. 42(3), pages 413-433, May.
    2. Cristina Arancibia & Mariana Dondo & Xavier Jara & David Macas & Nicolás Oliva & Rebeca Riella & David Rodríguez & Joana Urraburu, 2019. "Income redistribution in Latin America: A microsimulation approach," WIDER Working Paper Series wp-2019-1, World Institute for Development Economic Research (UNU-WIDER).
    3. Lara Ibarra,Gabriel & Sinha,Nistha & Fayez,Rana Nayer Safwat & Jellema,Jon Robbert, 2019. "Impact of Fiscal Policy on Inequality and Poverty in the Arab Republic of Egypt," Policy Research Working Paper Series 8824, The World Bank.
    4. German Freire & María Elena García Mora & Gabriel Lara Ibarra & Steven Schwartz Orellana, 2020. "Social Inclusion in Uruguay [Inclusión Social en Uruguay]," World Bank Publications - Reports 34229, The World Bank Group.
    5. Sean Higgins & Nora Lustig & Julio Ramirez & Billy Swanson, 2013. "Social Spending, Taxes and Income Redistribution in Paraguay," Working Papers 1311, Tulane University, Department of Economics.
    6. Sean Higgins & Nora Lustig & Julio Ramirez & William Swanson, 2013. "Social Spending, taxes and income redistribution in Paraguay," Commitment to Equity (CEQ) Working Paper Series 1311, Tulane University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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