Skip to content

Journal Article

Indexing out of poverty? Fiscal drag and benefit erosion in cross-national perspective

Authors

Publication date

05 Mar 2019

Summary

We assess how tax‐benefit policy developments in 2001–11 affected the household income distribution in seven EU countries. We use the standard microsimulation‐based decomposition method, separating further the effect of structural policy changes and the uprating of monetary parameters, which allows us to measure the extent of fiscal drag and benefit erosion in practice. The results show that despite different fiscal effects, policies overall mostly reduced poverty and inequality and both types of policy developments had sizeable effects on the income distribution. We also find that the uprating of monetary parameters not only had a positive effect on household incomes, meaning fiscal drag and benefit erosion were avoided, but generally also contributed more to poverty and inequality reduction than structural policy reforms.

Published in

Review of Income and Wealth

DOI

https://doi.org/10.1111/roiw.12413

Subjects

Households, Economics, Poverty, Public Policy, Welfare Benefits, Income Dynamics, Microsimulation, and Taxation

Notes

Online Early; Open Access; © 2019 The Authors. Review of Income and Wealth published by John Wiley & Sons Ltd on behalf of International Association for Research in Income and Wealth; This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.


Related publications

  1. Indexing out of poverty? Fiscal drag and benefit erosion in cross-national perspective

    Alari Paulus, Holly Sutherland, and Iva Valentinova Tasseva

    1. Households
    2. Economics
    3. Poverty
    4. Public Policy
    5. Welfare Benefits
    6. Income Dynamics
    7. Microsimulation
    8. Taxation

#525602


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest