Fuel subsidies and income redistribution in Ecuador

Publication type

Research Paper

Series Number

2018/144

Series

WIDER Working Papers

Authors

Publication date

November 15, 2018

Summary:

This paper aims to evaluate the progressivity of different fuel subsidies in Ecuador as well as the budgetary and distributional effects of a potential elimination of such subsidies.

Our analysis makes use of ECUAMOD, the tax-benefit microsimulation model for Ecuador, together with representative household microdata from ENIGHUR 2011–12.

Our results show that domestic gas subsidy tends to be progressive, whereas gasoline and diesel subsidies tend to be regressive. Our simulations show that eliminating all fuel subsidies would increase poverty and inequality due to the importance of domestic gas subsidy for low-income households. Eliminating only gasoline and diesel subsidies would not impact poverty and inequality, while allowing to reduce government expenditure.

We further show that using part of the budget saved from the elimination of fuel subsidies to increase social assistance payments in Ecuador, could be a mechanism to compensate low-income families for their loss following fuel subsidy elimination.

Subjects

Link

https://www.wider.unu.edu/publication/fuel-subsidies-and-income-redistribution-ecuador

#525635

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