Income inequality and redistributive government spending

by Luiz de Mello

Publisher: International Monetary Fund, Fiscal Affairs Department in [Washington, D.C.]

Written in English
Published: Pages: 25 Downloads: 275
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Subjects:

  • Income distribution.,
  • Expenditures, Public.,
  • Finance, Public.,
  • Capital markets.

Edition Notes

StatementLuiz de Mello and Erwin R. Tiongson.
SeriesIMF working paper -- WP/03/14
ContributionsTiongson, Erwin., International Monetary Fund. Research Dept.
The Physical Object
Pagination25 p. :
Number of Pages25
ID Numbers
Open LibraryOL20686023M

  Ever since the rise of the Occupy Wall Street movement in September , intellectuals and politicians have sought to blame rising income inequality for a host of economic, social, and political.   Spending on education and health also affects market income inequality over time by promoting social mobility, including across generations. In developing economies, fiscal redistribution is much weaker, given lower and less progressive taxes and spending.   For many years, the survey has asked people whether it is the government’s responsibility to reduce the income gap between rich and poor. Typically, the positive responses were low—only about. 4 1. Introduction This paper analyzes the impact of fiscal policy on inequality and poverty in twenty-nine low and middle income countries for around The studies apply the same fiscal incidence methodology described in detail in Lustig and Higgins and Lustig and Higgins (), Higgins and Lustig (), and Higgins.

Income Inequality, Welfare, The standard of liMng in and Poverty Ukraine increased significanty in the 1 s, and income inequality declined. But in An Illustration Using Ukrainian Data U income inequality and povertinceased again. partly because govemment Nanak Kakwani benefts went more to richer families than to those in need. T'he File Size: 2MB.   Lustig, Nora. “The Redistributive Impact of Government Spending on Education and Health: Evidence from 13 Developing Countries in the Commitment to Equity Project.” In Inequality and Fiscal Policy, edited by Sanjeev Gupta, Michael Keen, Benedict Clements, and Ruud de Mooij, chapter Washington, DC: International Monetary by: 1. reduce overall income inequality, but it remains above the OECD average. At the other end of the scale, four Nordic countries and Switzerland all have comparatively low labour income inequality because wage dispersion is narrow and employment rates are high. Cash transfers tend to be universal and are thus less redistributive. Income inequality forFile Size: KB. CPE 2 - Inequality and Redistribution Revision 2. STUDY. PLAY. - MW argue that rising inequality reduces government spending on insurance against loss of income. Occupational Risk DEMAND. and that increasing claims on these programs by low-income households have rendered government spending more redistributive, even as eligibility.

the reduction in income inequality and extreme poverty from personal income taxes and direct cash transfers var-ies considerably across countries, as shown in figure 1. In our sample, the income tax and cash transfer systems of argentina and .   Growing (Un)equal: Fiscal Policy And Income Inequality In China And BRIC+ – Introduction China represents an important case to analyze the long-term evolution of household income inequality. Since the first wave of economic liberalization in the late s, China has grown at an astonishing rate of almost 10 percent per year, raising

Income inequality and redistributive government spending by Luiz de Mello Download PDF EPUB FB2

Additional Physical Format: Online version: Mello, Luiz R. Income inequality and redistributive government spending. Washington, D.C.: International Monetary. Some studies found no evidence of a statistically significant relationship between government spending on health and education and the share of the poorest 20% of households in national income (e.g., Dollar et al.

(), 5), while others found evidence that certain types of government spending, for example, on social welfare, education and.

Increased Income Inequality in OECD Countries and the Redistributive Impact of the Government Budget The recent rise in inequality in the distribution of disposable income in many, although not all, countries has led to a search for explanations, particularly since for much of the postwar period falling income inequality has been the norm.

The recent rise in inequality in the distribution of disposable income in many, although not all, countries has led to a search for explanations, particularly since for much of the postwar period falling income inequality has been the norm.

In the OECD countries, on which this chapter concentrates, the cause has been identified as rising wage dispersion, coupled with persistent. Downloadable. The paper examines empirically the question of whether more unequal societies spend more on income redistribution than their more egalitarian counterparts.

Theoretical arguments on this issue are inconclusive. The political economy literature suggests that redistributive spending is higher in unequal societies due to median voter preferences.

Dimensions of Inequality. Inequality can be viewed from many perspectives. 5 Following most of the literature, the contributions in this book generally focus on inequality at the household level, measured primarily in monetary terms (annual income or consumption), and the effects of fiscal policies on these measures.

But many other dimensions of inequality can be of interest:. PDF | The relationship between redistributive spending and income inequality has been of interest to researchers for several decades. Existing | Find, read and cite all the research you need on Author: Kwang Bin Bae.

©International Monetary Fund. Not for Redistribution Excessive income inequality in many parts of the world is one of the defining issues of our time. Not only is extreme income inequality a moral and political issue, but it has important macro-economic implications.

There is growing evidence that excessive income inequality is detrimental. Redistribution of income and wealth is the transfer of income and wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law.

The term typically refers to redistribution on an economy-wide basis rather than between. Downloadable. This article examines empirically the question of whether more unequal societies spend more on income redistribution than their more egalitarian counterparts. Theoretical arguments on this issue are inconclusive.

The political economy literature suggests that redistributive spending should be higher in more unequal societies due to median voter. Specifically, the lack of inequality data for market income did not allow researchers to measure and analyze the redistributive effect of Government policy.

In contrast, the most recent version of SWIID provides historical estimates of Gini coefficients for disposable and market income for countries generally to Income inequality in the United States is the extent to which income is distributed in an uneven manner among the American population.

It has fluctuated considerably since measurements began aroundmoving in an arc between peaks in the s and s, with a year period of relatively lower inequality between – The relationship between redistributive fiscal policy and income distribution has a long history in the literature, suggesting that differences in the progressivity of tax and spending policies account for much of the observed variation in inequality of average disposable income within countries (for example, Bastagli, Coady, and Gupta ).

Increased Income Inequality in OECD Countries and the Redistributive Impact of the Government Budget The recent rise in inequality in the distribution of disposable income in many, although not all, countries has led to a search for explanations, particularly since for much of the postwar period falling inequality has been the norm.

The redistributive implications of lower tax and spending can be seen by comparing the redistributive impact of fiscal policy in Latin America (the region with the highest average level of income inequality, and higher tax and spending levels compared with other developing countries) with the impact in advanced economies (the region with the.

In contrast to Meltzer andRichard (, ), Moene and Wallerstein (, ) argue that rising income inequality results in the median-voter having a lower preference for redistributive.

Inthe ratio between the income of the top and bottom 20 percent of the world's population was three to one. Byit was eighty-six to one. A study titled "Divided we Stand: Why Inequality Keeps Rising" by the Organisation for Economic Co-operation and Development (OECD) sought to explain the causes for this rising inequality by investigating economic.

Welfare for the Wealthy: Parties, Social Spending, and Inequality in the United States - Kindle edition by Faricy, Christopher G.

Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Welfare for the Wealthy: Parties, Social Spending, and Inequality in the United States.5/5(1).

In Inequality and the Fading of Redistributive Politics, leading political scientists, sociologists, and economists point to the failure of public policy to contain surging income inequality. Government programs are no longer offsetting the growth in inequality generated by the market, and Canadian society has become more unequal.

In Canada the top one per cent of pre-tax income earners captured 37 per cent of the overall income growth between andand now swallows up per cent of the country's income pie. The OECD analysis shows that income inequality is on the rise in most developed economies, but the trend has particularly taken hold in the United States.

Christopher Faricy finds that both Democrats and Republicans have increased social spending over the last forty-two years. And while both political parties increase federal social spending, Democrats and Republicans differ in how they spend federal money, which socioeconomic groups benefit, and the resulting consequences for income by:   Income inequality has been rising in many parts of the world in recent decades.

This, and the social tensions associated with fiscal consolidation that many have faced in part stemming from the global financial crisis, have put the distributional impact of governments’ tax and spending policies at the heart of the public debate in many countries.

'Christopher Faricy provides a critically important and typically overlooked perspective on America’s welfare state. By bringing tax expenditures, as well as direct government spending into the discussion, he shows that redistributive social policies are embraced by both political parties - using different policy tools and benefiting different by: One recent study uses MRA to look at the effects of government spending on income inequality, and finds some evidence of a moderate negative relationship, which is strongest when using the Gini coefficient or the top income share as the inequality measure (Anderson, D’Orey, Duvendack, & Esposito, a).Cited by: 4.

1The redistributive task of the government has been the object of extensive studies by Alesina and Glaeser () and Moene and Wallerstein (a), (b) and (). Their concern is the relationship between the pre-tax income inequality, the progressivity of the income tax and the size of the social transfers.

They leave aside the public. The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. Whenever the market booms, the share of income going to those at the very top increases. the redistributive impact is limited by greater reliance on indirect taxes.

Taxes have been found to have only a small impact on income inequality in developing economies, with the average Gini for disposable income of being only slightly below the pre-tax income inequality of (Chu, Davoodi, and Gupta ).

Guatemala is less redistributive when compared with countries that have similar per capita income like Bolivia and El Salvador.

41 Both Bolivia and El Salvador devote a higher share of fiscal resources to social spending (as a share of GDP) than Guatemala.

42 Aroundsocial spending was % and % of GDP in Bolivia and El Salvador Cited by: Data from household income tax returns in shows that the top 1% of households had an average income of $1, per year in pre-tax income and paid an average federal tax rate of %.

The effective income tax, which is total taxes paid divided by total income (all sources of income such as wages, profits, interest, rental income, and.

Inequality and the Fading of Redistributive Politics. KEITH BANTING AND JOHN MYLES. The redistributive state is fading in Canada.

Until the mids, the con-sensus was that Canada was not following the lead of the United States and the United Kingdom, where the level of inequality began to grow in the late. The numbers for “post-tax” income that Piketty, Saez, and Zucman calculate take into account taxes paid to every level of government and also factor in the impact of government transfer programs and public spending on goods and services.

Between andAmerica poorest did quite well by these “post-tax” calculations. In-kind transfers (that is, government spending on goods or services offered to the public, mainly health and education) has reduced inequality in those countries by another 15 percent.

Developing countries have shown more limited fiscal redistribution, reflecting lower tax and spending levels (Chart 2) and the less progressive composition of.The fact is, America already has a redistributionist income tax: the top 20 percent of earners pay 84 percent of income tax revenues, and the top 1 percent, with .