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The redistributive function of the EU budget

Paolo Pasimeni and Stéphanie Riso

No 174-2016, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper measures the net redistributive impact of the EU budget. It finds that for every €1,000 difference in income per capita across countries, €9 is offset by lower contributions to the budget and € 3 is offset by higher expenditures by the budget. The overall equalising effect is small (1.1%) and depends on the revenue side, in particular on the national contribution based on GNI and VAT, which is also the main source of stabilisation. The analysis shows how the various corrections mechanisms applied to the revenue side of the budget reduce its redistributive and stabilisation capacity. The policy conclusions are that on the revenue side, since the national contribution based on GNI is the main source of redistribution and stabilisation), its reduction could reduce the already minimal capacity of the budget to perform these functions. On the expenditure side, the shift from pre-allocated types of expenditures towards non-pre-allocated ones may determine a reduction of the overall redistributive capacity of the budget.

JEL-codes: E61 E62 H11 H61 H77 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2016
New Economics Papers: this item is included in nep-mac and nep-pub
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