Income Redistribution Around the Globe: Determinants and Mechanisms

Ali Enami () and Nora Lustig
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Ali Enami: The University of Akron
Nora Lustig: Tulane University

No 680, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: Income redistribution through taxes and transfers varies significantly across countries and time. This study re-examines the determinants of redistribution using a novel dataset of 100 observations from 77 mostly low- and middle-income countries. The analysis addresses key econometric challenges, incorporates a broader range of fiscal interventions than previous studies, and decomposes redistribution into three channels: progressivity, size, and reranking. A stronger rule of law, higher ethnic fractionalization, a larger old-age population, greater female parliamentary representation, higher unemployment, a higher income ratio between middle and top deciles, and federal systems are linked to greater redistribution. Conversely, democracy and larger population size correlate with lower redistribution. Size and progressivity of direct transfers and indirect taxes emerge as the primary mechanisms driving these outcomes.

Keywords: income redistribution; Gini; progressivity and size of fiscal interventions; reranking (search for similar items in EconPapers)
JEL-codes: D63 H22 H23 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2025-01
New Economics Papers: this item is included in nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2025-680

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