IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/359.html
   My bibliography  Save this paper

The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015

Author

Listed:
  • van de Ven, Justin
  • Hérault, Nicolas

Abstract

An issue of interest in the literature that explores the drivers of inequality is the distributional bearing of tax and transfer policy, where an important theme concerns changes in the relative treatment of alternative population subgroups. We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by a tax and transfer system. We apply this approach to UK data reported at annual intervals between 1968 and 2015, documenting remarkable improvements in tax and transfer treatment enjoyed by some population subgroups - particularly families with children and age pensioners - relative to the wider population. We show that accounting for the changing value judgements implicit in tax and transfer policy provides a fresh perspective on the evolution of income inequality and redistribution; one that departs from the prevailing view that UK inequality stopped rising from the early 1990s.

Suggested Citation

  • van de Ven, Justin & Hérault, Nicolas, 2019. "The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015," GLO Discussion Paper Series 359, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:359
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/199087/1/GLO-DP-0359.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June.
    2. Olivier Bargain, 2012. "The Distributional Effects of Tax-benefit Policies under New Labour: A Decomposition Approach-super-," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(6), pages 856-874, December.
    3. John Hills, 2007. "Ends and Means: The future roles of social housing in England," CASE Reports casereport34, Centre for Analysis of Social Exclusion, LSE.
    4. Lindert, Peter H., 1998. "Poor relief before the Welfare State: Britain versus the Continent, 1780–1880," European Review of Economic History, Cambridge University Press, vol. 2(2), pages 101-140, August.
    5. Hills, John, 2004. "Inequality and the State," OUP Catalogue, Oxford University Press, number 9780199276646.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Brewer, Mike & O'Dea, Cormac, 2012. "Measuring living standards with income and consumption: evidence from the UK," ISER Working Paper Series 2012-05, Institute for Social and Economic Research.
    8. Garry Barrett & Peter Levell & Kevin Milligan, 2014. "A Comparison of Micro and Macro Expenditure Measures across Countries Using Differing Survey Methods," NBER Chapters, in: Improving the Measurement of Consumer Expenditures, pages 263-286, National Bureau of Economic Research, Inc.
    9. Lane Kenworthy & Timothy Smeeding, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the United States," GINI Country Reports united_states, AIAS, Amsterdam Institute for Advanced Labour Studies.
    10. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-270, March.
    11. Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
    12. Anthony B. Atkinson, 2000. "The Changing Distribution of Income: Evidence and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(1), pages 3-18, February.
    13. Immervoll, Herwig & Richardson, Linda, 2011. "Redistribution Policy and Inequality Reduction in OECD Countries: What Has Changed in Two Decades?," IZA Discussion Papers 6030, Institute of Labor Economics (IZA).
    14. Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2018. "Survey Under‐Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK's SPI Adjustment?," Fiscal Studies, John Wiley & Sons, vol. 39(2), pages 213-240, June.
    15. Anthony B. Atkinson & Wiemer Salverda, 2005. "Top Incomes In The Netherlands And The United Kingdom Over The 20th Century," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 883-913, June.
    16. Martin Biewen & Andos Juhasz, 2017. "Direct Estimation of Equivalence Scales and More Evidence on Independence of Base," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(5), pages 875-905, October.
    17. Linda Richardson & Herwig Immervoll, 2011. "Redistribution Policy and Inequality Reduction in OECD Countries: What Has Changed in Two Decades?," LIS Working papers 571, LIS Cross-National Data Center in Luxembourg.
    18. Sheldon Danziger & Michael K. Taussing, 1979. "The Income Unit And The Anatomy Of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 365-375, December.
    19. Machin, Stephen, 2001. "The Changing Nature of Labour Demand in the New Economy and Skill-Biased Technology Change," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 753-776, Special I.
    20. Richard Blundell & Ben Etheridge, 2010. "Consumption, Income and Earnings Inequality in Britain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 76-102, January.
    21. Mike Brewer & Cormac O'Dea, 2012. "Measuring living standards with income and consumption: evidence from the UK," IFS Working Papers W12/12, Institute for Fiscal Studies.
    22. Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
    23. Danziger, Sheldon & Taussig, Michael K, 1979. "The Income Unit and the Anatomy of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 365-375, December.
    24. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October.
    25. de Ree, Joppe & Alessie, Rob & Pradhan, Menno, 2013. "The price and utility dependence of equivalence scales: Evidence from Indonesia," Journal of Public Economics, Elsevier, vol. 97(C), pages 272-281.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    equivalence scale; inequality; redistribution; horizontal equity;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:359. 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: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/glaboea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.