Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction

Elvire Guillaud (), Matthew Olckers and Michaël Zemmour ()
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Elvire Guillaud: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques (Sciences Po) - Sciences Po - Sciences Po
Michaël Zemmour: CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique, LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques (Sciences Po) - Sciences Po - Sciences Po, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: We use harmonized survey data from the Luxembourg Income Study to assess the redistributive impact of taxes and transfers across 22 OECD countries over the 1999–2016 period. After imputing missing tax data (employer social‐security contributions), we measure the reduction in income inequality from four key levers of tax and transfer systems: the average tax rate, tax progressivity, the average transfer rate, and transfer targeting. Our methodological improvements produce the following results. First, tax redistribution dominates transfer redistribution (excluding pensions) in most countries. Second, targeting explains very little of the cross‐country variation in inequality reduction. In contrast, both tax progressivity and the average tax rate have large impacts on redistribution. Last, there seem to be political tradeoffs: high average tax rates are not found together with highly progressive tax systems.

Keywords: Tax-transfer policies; Social-security contributions; Redistribution (search for similar items in EconPapers)
Date: 2020-05-18
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Citations: View citations in EconPapers (13)

Published in Review of Income and Wealth, 2020, 66 (2), pp.444-466. ⟨10.1111/roiw.12408⟩

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Related works:
Journal Article: Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction (2020)
Working Paper: Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction (2020)
Working Paper: Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction (2020)
Working Paper: Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction (2020)
Working Paper: Four levers of redistribution: The impact of tax and transfer systems on inequality reduction (2017)
Working Paper: Four levers of redistribution: The impact of tax and transfer systems on inequality reduction (2017)
Working Paper: Four levers of redistribution: The impact of tax and transfer systems on inequality reduction (2017)
Working Paper: Four levers of redistribution: The impact of tax and transfer systems on inequality reduction (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-02735358

DOI: 10.1111/roiw.12408

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