Social Spending, Taxes and Income Redistribution in Ecuador

Freddy Llerena Pinto (), M. Cristhina Llerena Pinto () and M. Andrea Llerena Pinto ()
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M. Cristhina Llerena Pinto: ECONOMICA CIC. Research Center

No 28, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: An analysis of the redistributive effect of fiscal policy on poverty reduction and income distribution in Ecuador using household survey data is described. Due to the detail and depth of the database, it is possible to single out the effects of direct transfers and taxes, indirect taxes and subsidies, and the use of public education and health services. Standard incidence analysis shows that direct taxes are progressive. Nonetheless, they have a negligible effect on both income distribution and poverty. Indirect taxes are progressive as well, due to several exemptions from the value added tax. Social spending on direct transfers, education, and health is progressive in absolute terms, except for secondary education, wherein it is neutral. Ecuador ranks first in inequality reduction effectiveness and second in poverty reduction effectiveness when compared to six other Latin American countries. However, it ranks only fourth in overall inequality and poverty reduction.

Keywords: Poverty; Inequality; Transfers and Taxes; Government Benefits; Ecuador (search for similar items in EconPapers)
JEL-codes: D31 H22 I3 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Published in Commitment to Equity, February 2015, pages 1-43

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http://repec.tulane.edu/RePEc/ceq/ceq28.pdf First version, 2015 (application/pdf)

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