Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018

Nicolas Hérault and Stephen Jenkins

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977–2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference (‘pre-fisc’) distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times.

Keywords: Kakwani decomposition; inequality; redistributive effect; progressivity; reranking; benefits; taxes (search for similar items in EconPapers)
JEL-codes: D31 H24 H50 I38 (search for similar items in EconPapers)
Pages: 43pp
Date: 2021-11
New Economics Papers: this item is included in nep-eur, nep-ltv, nep-pbe and nep-pub
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https://melbourneinstitute.unimelb.edu.au/__data/a ... 948981/wp2021n23.pdf (application/pdf)

Related works:
Working Paper: Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018 (2021)
Working Paper: Redistributive Effect and the Progressivity of Taxes and Benefits: Evidence for the UK, 1977-2018 (2021)
Working Paper: Redistributive Effect and the Progressivity of Taxes and Benefits: Evidence for the UK, 1977–2018 (2021)
Working Paper: Redistributive Effect and the Progressivity of Taxes and Benefits: Evidence for the UK, 1977–2018 (2021)
Working Paper: Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977-2018 (2021)
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