Inequality and redistribution: evidence from Scandinavian and Mediterranean countries

Oscar Claveria and Petar Sorić

Applied Economic Analysis, 2023, vol. 32, issue 94, 1-22

Abstract: Purpose - The purpose of this paper is to investigate the adjustment of government redistributive policies in Scandinavian and Mediterranean countries following changes in income inequality over the period 1980–2021. Design/methodology/approach - The authors first modelled the time-varying dynamics between income inequality and redistribution and then used a non-linear framework to test for the existence of asymmetries and cointegration in their long-run relationship. The authors used two complementary measures of inequality – the share of total income accruing to top percentile income holders and the ratio of the share of total income accruing to top decile income holders divided by that accumulated by the bottom 50% – and computed redistribution as the difference between the two inequality indicators before and after taxes and transfers. Findings - The authors found that the sign of the relationship between income inequality and redistribution is mostly positive and time-varying. Overall, the authors also found evidence that the impact of increases in inequality on redistributive measures is higher than that of decreases. Finally, the authors obtained a significant long-run relationship between both variables in all countries except Denmark and Spain. These results hold for both Scandinavian and Mediterranean countries. Originality/value - To the best of the authors’ knowledge, this is the first paper to account for the potential existence of non-linearities and to examine the asymmetries in the adjustment of redistributive policies to increases in income inequality using alternative income inequality metrics.

Keywords: Taxes; Income inequality; Government transfers; Redistributive policy (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (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:eme:aeapps:aea-06-2023-0201

DOI: 10.1108/AEA-06-2023-0201

Access Statistics for this article

Applied Economic Analysis is currently edited by Carmen Díaz-Mora and Francisco Requena

More articles in Applied Economic Analysis from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().