Publication type
Journal Article
Author
Publication date
June 1, 2012
Abstract:
For policy makers and analysts, it is important to isolate the redistributive
impact of tax-benefit reforms from changes in the environment in which policies
operate. When actual reforms are motivated by work incentives, it is also crucial to
evaluate behavioural responses and the distributional consequences thereof. For that
purpose, I embed counterfactual simulations in a formal decomposition framework to
quantify the relative roles of (i) direct tax-benefit policy changes, (ii) indirect policy
effects due to labour supply responses to the reforms and (iii) all other factors affecting
income distribution over time. An application to the UK shows that the redistributive
reforms of the 1998–2001 period have offset much of the rise in market income
inequality and contributed to a strong decline in child poverty and poverty amongst
single parent households. In the latter group, a third of the headcount poverty reduction
(and half of the reduction in the depth of poverty) is on account of the very large
incentive effect of the policy changes.
Published in
International Tax and Public Finance
Volume and page numbers
Volume: 19 , p.708 -731
DOI
http://dx.doi.org/10.1007/s10797-011-9203-y
ISSN
9275940
Subjects
Notes
Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*
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