Tax-benefit systems, income distribution and work incentives in the European Union

H. Xavier Jara and Alberto Tumino

No EM7/13, EUROMOD Working Papers from EUROMOD at the Institute for Social and Economic Research

Abstract: In this paper we study the impact of tax-benefit systems on income inequality and work incentivesacross the 27 Member States of the European Union (EU). Using EUROMOD, the EU-wide taxbenefitmicrosimulation model, we disentangle the role of taxes, benefits and social insurancecontributions in influencing country specific Gini coefficients and Marginal Effective Tax Rates.The extent to which tax-benefit systems contribute to income redistribution and provide work incentives at the intensive margin is found to vary considerably across the 27 Member States of the EU. Our results further highlight the presence of a trade-off between income redistribution and work incentives across EU-27 countries.

Date: 2013-03-28
New Economics Papers: this item is included in nep-acc, nep-eur, nep-pbe and nep-pub
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Journal Article: Tax-benefit systems, income distribution and work incentives in the European Union (2013)
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