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

Nora Lustig, Valentina Martinez Pabon and Carola Pessino
Additional contact information
Valentina Martinez Pabon: Yale University
Carola Pessino: IDB

No 2402, Working Papers from Tulane University, Department of Economics

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: 2024-01
New Economics Papers: this item is included in nep-inv, nep-lam, nep-ltv and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.tulane.edu/RePEc/pdf/tul2402.pdf First Version, January 2024 (application/pdf)

Related works:
Working Paper: Fiscal policy, income redistribution, and poverty reduction in Latin America (2023)
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:tul:wpaper:2402

Access Statistics for this paper

More papers in Working Papers from Tulane University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kerui Geng ().