Income Instability and Fiscal Progression

Jean-Francois Wen and Garcia-Medina Cecilia

No 2016-07, Working Papers from Banco de México

Abstract: We construct the ratio of the post-fisc to the pre-fisc transitory component of the variance of family incomes in Canada from 1993 and 2008. The ratio measures how much the tax and transfer system attenuates market income instability. It is shown that the ratio of variances is equivalent theoretically to the concept of residual income progression. The fiscal system became less stabilizing beginning in the late 1990s, especially for families headed by main earners with less than high school education. The trend is attributable to personal income tax reforms and reductions in transfers for lower income families.

Keywords: Income Instability; Progressive Taxation; Employment Insurance (search for similar items in EconPapers)
JEL-codes: H22 H53 J38 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-edu, nep-lma, nep-net, nep-pbe and nep-pub
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Related works:
Journal Article: Income instability and fiscal progression (2018)
Working Paper: Income Instability and Fiscal Progression (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bdm:wpaper:2016-07

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