Lorenz versus Zenga Inequality Curves: a New Approach to Measuring Tax Redistribution and Progressivity

Francesca Greselin (), Simone Pellegrino and Achille Vernizzi

No 46, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: In this paper we introduce a new methodology to study the degree of progression as well as the redistributive and re-ranking effects of a personal income tax system by employing and extending the new inequality curve (and index) proposed by Michele Zenga. Given an income distribution, the Zenga curve compares the economic conditions of two exhaustive groups of population obtained by dividing the overall population at all possible percentiles, from the bottom to the top observed income. Since the recent literature underlines that the Zenga curve shows features that are different from the standard approach based on the Lorenz curves, we show the potentialities of the new curve when studying the effects exerted by a personal income tax. This new methodology is compared to the classical one by a stylized example and by developing an application to Italian personal income tax data.

Keywords: Personal Income Tax; Gini Index; Microsimulation Models; Reynolds-Smolensky Index; Kakwani index; Zenga Index. (search for similar items in EconPapers)
JEL-codes: H23 H24 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017-12
New Economics Papers: this item is included in nep-eur, nep-pbe and nep-pub
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