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Inequality Measurement and Tax/Transfer Policy

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  • Patricia Apps
  • Ray Rees

Abstract

We provide a critique of the standard methodology which bases welfare comparisons between households on deflating household income and consumption by an equivalence scale. We argue that this leads to support for tax/transfer policies that significantly disadvantage low to middle in-come households and women as second earners. We base the critique both on a theoretical model of the family household and a detailed analysis of Australian income and employment data.

Suggested Citation

  • Patricia Apps & Ray Rees, 2020. "Inequality Measurement and Tax/Transfer Policy," CESifo Working Paper Series 8378, CESifo.
    • Handle: RePEc:ces:ceswps:_8378
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    References listed on IDEAS

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    51. Apps, Patricia & Rees, Ray, 2001. "Household production, full consumption and the costs of children," Labour Economics, Elsevier, vol. 8(6), pages 621-648, December.
    52. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
    53. Jens Bonke & Martin Browning, 2009. "The Allocation of Expenditures within the Household: A New Survey," Fiscal Studies, Institute for Fiscal Studies, vol. 30(Special I), pages 461-481, December.
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    Cited by:

    1. Jan Marvin Garbuszus & Notburga Ott & Sebastian Pehle & Martin Werding, 2021. "Income-dependent equivalence scales: A fresh look at German micro-data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(4), pages 855-873, December.
    2. Ray Rees & Thor O. Thoresen & Trine E. Vattø, 2023. "Alternatives to Paying Child Benefit to the Rich: Means‐Testing or Higher Tax?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(3), pages 328-354, September.

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    More about this item

    Keywords

    inequality; equivalence scales; tax/transfer policy; families;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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