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Accounting for differences in income inequality across countries: tax-benefit policy, labour market structure, returns and demographics.
- Source :
- Journal of Economic Inequality; Mar2021, Vol. 19 Issue 1, p13-43, 31p
- Publication Year :
- 2021
-
Abstract
- This paper presents a framework for studying international differences in the distribution of household income. Integrating micro-econometric and micro-simulation approaches in a decomposition analysis, it quantifies the role of tax-benefit systems, employment and occupational structures, labour and financial market returns, and demographic composition in accounting for differences in income inequality across countries. Building upon EUROMOD (the European tax-benefit calculator) and its harmonised datasets, the model is portable and can be implemented for cross-country comparisons between any participating country. An application to the UK and Ireland—two countries that have much in common while displaying different levels of inequality—shows that differences in tax-benefit rules between the two countries account for over one third of the observed difference in disposable household income inequality. Demographic differences play negligible roles. The Irish tax-benefit system is more redistributive than UK's due to a higher tax progressivity and higher average transfer rates. These are largely attributable to policy parameter differences, but also to differences in pre-tax, pre-transfer income distributions. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 15691721
- Volume :
- 19
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Journal of Economic Inequality
- Publication Type :
- Academic Journal
- Accession number :
- 149022697
- Full Text :
- https://doi.org/10.1007/s10888-020-09454-7