Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America

Nora Lustig, Valentina Martinez Pabon and Carola Pessino

No 13193, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper uses standard fiscal incidence analysis to study how much income redistribution and poverty reduction are accomplished through the fiscal system in eighteen Latin American and Caribbean (LAC) countries. We show there is considerable heterogeneity in the income inequality and poverty-reducing power of LAC fiscal systems. While all LAC fiscal systems reduce income inequality, fiscal systems in nine LAC countries are poverty-increasing, and this startling characteristic has not improved over time. When analyzing specific fiscal elements, we find that direct taxes, direct transfers, and in-kind transfers are all equalizing, and spending on education and health is often pro-poor. Moreover, contrary to expectations, indirect taxes and subsidies are more frequently equalizing than unequalizing.

Keywords: Fiscal policy; Inequality; Poverty; Latin America (search for similar items in EconPapers)
JEL-codes: D31 D6 E62 H22 I32 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-inv, nep-lam and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://publications.iadb.org/publications/english ... in-Latin-America.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:13193

DOI: 10.18235/0005237

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library (bid-library@iadb.org).