Description
The past decade has seen extremely variable economic conditions, and a large number of policy reforms with differing objectives (from poverty reduction to deficit reduction). In this project, we seek to isolate the redistributive impact of tax-benefit policy changes from changes in the environment in which policies operate, but also understand more what sort of non-policy changes are behind observed changes in inequality. We will adopt the Shorrocks-Shapley (e.g. see Bargain and Callan, 2010) and Oaxaca-Blinder (e.g. see Bourguignon et al., 2008) decomposition approaches to examine changes in the distribution of household disposable income over the past decade; these changes will be decomposed into policy effects from changes in the tax-benefit system (e.g. changes in benefit indexation, reforms in income taxation etc.) and non-policy effects coming from changes in the characteristics of the underlying population (e.g. changes in returns to education, employment, household structure).
To estimate the different effects, we simulate counterfactual income distributions using the tax-benefit model EUROMOD and a combination of parametric and non-parametric methods. In addition to analysing historical data, we will also assess the performance of current policies under a range of scenarios for 2020 in terms of income growth and labour market and demographic change in order to understand the extent to which existing welfare and taxation policies meet the needs of the next decade. We cover a number of EU countries, selected to provide examples of all types of welfare states – socio-democratic (Nordic), liberal (Anglo-Saxon), conservative, Southern European as well as Eastern European, and also choosing particular countries on the basis of their underlying economic fortunes and the direction of policy reforms.
Researchers
Professor Holly Sutherland, Research Professor and Director of EUROMOD, University of Essex, hollys@essex.ac.uk
Mr Alari Paulus, Research Fellow, University of Essex, apaulus@essex.ac.uk
Ms Iva Valentinova Tasseva, Senior Research Officer, University of Essex, itasseva@essex.ac.uk
Mr Joonas Ollonqvist, PhD student, University of Turku, jeaoll@utu.fi
Mr Jacob Lundberg, Doctoral student, Uppsala University, Jacob.Lundberg@nek.uu.se
See full project page here