scholarly journals Tax, transfers, and income inequality in New Zealand during 1988-2013

2021 ◽  
Author(s):  
◽  
Matthew Nolan
Keyword(s):  
New Zealand ◽  
Income Inequality ◽  
Income Distribution ◽  
Labour Supply ◽  
Disposable Income ◽  
Parameter Estimates ◽  
Transfer System ◽  
Transfer Policy ◽  
Transfer Payments ◽  
The Impact

<p>This dissertation investigates the role tax and transfer policy changes played in the evolution of New Zealand disposable income inequality between 1988 and 2013. Across five papers, the key changes in tax and transfer policies are identified, the labour supply response of individuals to the changes are estimated, and the impact of these changes on the income distribution is quantified. Overall, nearly 40% of the increase in income inequality during this period is attributable to changes in the tax-transfer system.  The tax and transfer payment changes investigated in this dissertation cover the gradual flattening of the tax scale over the 1980/90s, the reduction in benefit payments following the 1991 Mother of All Budgets, the introduction of Working for Families in 2005, and the erosion of transfer payments relative to the average wage throughout the period.  Given these changes, the efficacy of the tax transfer system for meeting vertical and horizontal equity goals is evaluated using data from the Household Economic Survey (HES). The redistributive effect of tax-transfer policy fell from 22.6 Gini points to 18.2 Gini points between 1988/91 and 2011/13, with a corresponding decline in the amount of vertical equity in the tax-transfer system. Between the same periods the degree of horizontal inequity rose,although this was predominantly the result of greater targeting in the tax-transfer system.  The adjustment in the structure of the tax-transfer system not only leads to a change in tax liabilities and transfer payments, but also generates a behavioural change by individuals with regards to the number of hours they would be willing to work. Preference parameter estimates over hours of work and income are generated for individuals in the sample, with imputed wages estimated for those who are out of work.  A tax-transfer microsimulation model, that utilises wage and preference parameter estimates, is then used to construct counterfactual scenarios where the tax-transfer system of a given year is applied to the population of other years. For example, the tax-transfer system of 1988-1991 is applied to the population in 2010-2013 in order to create a scenario representing what the disposable income distribution in 2010-2013 would look like with the 1988-1991 tax-transfer system. Estimates from this process suggest that nearly 40% of the increase in disposable income inequality between the 1988/91 and 2010/13 periods was due to the change in payments and labour supply behaviour associated with tax-transfer policy adjustments.  Other potential drivers of income inequality change were investigated by reweighting the HES data of one period to more closely represent the population of another period. Although shifts in the share of individuals in part time work also generated an increase in income inequality, the lift in higher educational attainment over this period is estimated to have reduced income inequality more sharply (by nearly 22%). The shift in the age distribution towards prime-aged work was not associated with any change in the aggregate income inequality measure.</p>

scholarly journals Tax, transfers, and income inequality in New Zealand during 1988-2013

2021 ◽  
Author(s):  
◽  
Matthew Nolan
Keyword(s):  
New Zealand ◽  
Income Inequality ◽  
Income Distribution ◽  
Labour Supply ◽  
Disposable Income ◽  
Parameter Estimates ◽  
Transfer System ◽  
Transfer Policy ◽  
Transfer Payments ◽  
The Impact

<p>This dissertation investigates the role tax and transfer policy changes played in the evolution of New Zealand disposable income inequality between 1988 and 2013. Across five papers, the key changes in tax and transfer policies are identified, the labour supply response of individuals to the changes are estimated, and the impact of these changes on the income distribution is quantified. Overall, nearly 40% of the increase in income inequality during this period is attributable to changes in the tax-transfer system.  The tax and transfer payment changes investigated in this dissertation cover the gradual flattening of the tax scale over the 1980/90s, the reduction in benefit payments following the 1991 Mother of All Budgets, the introduction of Working for Families in 2005, and the erosion of transfer payments relative to the average wage throughout the period.  Given these changes, the efficacy of the tax transfer system for meeting vertical and horizontal equity goals is evaluated using data from the Household Economic Survey (HES). The redistributive effect of tax-transfer policy fell from 22.6 Gini points to 18.2 Gini points between 1988/91 and 2011/13, with a corresponding decline in the amount of vertical equity in the tax-transfer system. Between the same periods the degree of horizontal inequity rose,although this was predominantly the result of greater targeting in the tax-transfer system.  The adjustment in the structure of the tax-transfer system not only leads to a change in tax liabilities and transfer payments, but also generates a behavioural change by individuals with regards to the number of hours they would be willing to work. Preference parameter estimates over hours of work and income are generated for individuals in the sample, with imputed wages estimated for those who are out of work.  A tax-transfer microsimulation model, that utilises wage and preference parameter estimates, is then used to construct counterfactual scenarios where the tax-transfer system of a given year is applied to the population of other years. For example, the tax-transfer system of 1988-1991 is applied to the population in 2010-2013 in order to create a scenario representing what the disposable income distribution in 2010-2013 would look like with the 1988-1991 tax-transfer system. Estimates from this process suggest that nearly 40% of the increase in disposable income inequality between the 1988/91 and 2010/13 periods was due to the change in payments and labour supply behaviour associated with tax-transfer policy adjustments.  Other potential drivers of income inequality change were investigated by reweighting the HES data of one period to more closely represent the population of another period. Although shifts in the share of individuals in part time work also generated an increase in income inequality, the lift in higher educational attainment over this period is estimated to have reduced income inequality more sharply (by nearly 22%). The shift in the age distribution towards prime-aged work was not associated with any change in the aggregate income inequality measure.</p>

The effects of debt restructurings on income inequality in the developing world

2021 ◽  
pp. 135406612110014
Author(s):  
Glen Biglaiser ◽  
Ronald J. McGauvran
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Income Inequality ◽  
Income Distribution ◽  
Government Spending ◽  
Tax Reform ◽  
Social Spending ◽  
The Poor ◽  
The Rich ◽  
The Impact

Developing countries, saddled with debts, often prefer investors absorb losses through debt restructurings. By not making full repayments, debtor governments could increase social spending, serving poorer constituents, and, in turn, lowering income inequality. Alternatively, debtor governments could reduce taxes and cut government spending, bolstering the assets of the rich at the expense of the poor. Using panel data for 71 developing countries from 1986 to 2016, we assess the effects of debt restructurings on societal income distribution. Specifically, we study the impact of debt restructurings on social spending, tax reform, and income inequality. We find that countries receiving debt restructurings tend to use their newly acquired economic flexibility to reduce taxes and lower social spending, worsening income inequality. The results are also robust to different model specifications. Our study contributes to the globalization and the poor debate, suggesting the economic harm caused to the less well-off following debt restructurings.

scholarly journals The impact of uptake of selected agricultural technologies on rice farmers’ income distribution in Ghana

2022 ◽  
Vol 11 (1) ◽  
Author(s):  
Monica Addison ◽  
Kwasi Ohene-Yankyera ◽  
Patricia Pinamang Acheampong ◽  
Camillus Abawiera Wongnaa
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Empirical Result ◽  
National Development ◽  
Farm Size ◽  
Rice Seed ◽  
Agricultural Technologies ◽  
Rice Farmers ◽  
Rural Income ◽  
The Impact

Abstract Background Government of Ghana’s effort to reduce income inequality consistently poses a major challenge to public policy formulation. The promotion and dissemination of agricultural technologies as a pathway out of income inequality in rural Ghana have received widespread support. Yet, knowledge about the impact of agricultural technologies on rural income inequality remains low. The objective of the study is to evaluate the link between the uptake of improved rice technologies and income distribution in the study area. Methods This paper uses a survey data from 917 smallholder rice producers in selected communities in Ghana. The study employs the Bourguignon, Fournier, and Gurgand (BFG) selection bias correction model, a two-stage model, to empirically analyse the role of agricultural technologies in rural income distribution. Results The empirical result shows that education, farm size, land ownership, participation in relevant extension training programmes enhance adoption, but gender (female) inhibits uptake of the selected technologies. The empirical result further shows that the uptake of the improved rice seed and fertilizer increases rice farmers’ net revenue significantly. The result further indicates that farmers’ choice of the selected agricultural technologies decreases the sample population income inequality, indicating the uptake of the technologies has an equalizing effect on rice farmers’ income distribution. Conclusion The study concludes that the use of the selected technologies has potential to fight rural poverty in Ghana. The findings have implications for National Development Planning Commission (NDPC) agenda of redistribution of wealth in Ghana.

scholarly journals Inequality over the business cycle: the role of distributive shocks

2021 ◽  
pp. 1-30
Author(s):  
Marius Clemens ◽  
Ulrich Eydam ◽  
Maik Heinemann
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Business Cycle ◽  
Parameter Estimates ◽  
Panel Estimation ◽  
Bayesian Techniques ◽  
Elasticity Of Intertemporal Substitution ◽  
Ex Ante ◽  
The Business Cycle

Abstract This paper examines how wealth and income inequality dynamics are related to fluctuations in the functional income distribution over the business cycle. In a panel estimation for OECD countries between 1970 and 2016, although inequality is, on average countercyclical and significantly associated with the capital share, one-third of the countries display a pro- or noncyclical relationship. To analyze the observed pattern, we incorporate distributive shocks into an RBC model, where agents are ex ante heterogeneous with respect to wealth and ability. We find that whether wealth and income inequality behave countercyclically or not depends on the elasticity of intertemporal substitution and the persistence of shocks. We match the model to quarterly US data using Bayesian techniques. The parameter estimates point toward a non-monotonic relationship between productivity and inequality fluctuations. On impact, inequality increases in response to TFP shocks but subsequently declines. Furthermore, TFP shocks explain 17% of inequality fluctuations.

On the Impact of Government Institutions on Economic Growth and Income Inequality in Russia

2019 ◽  
Vol 7 (3) ◽  
pp. 14-17
Author(s):  
Леонид Басовский ◽  
Leonid Basovskiy ◽  
В. Бабанов ◽  
V. Babanov ◽  
Елена Басовская ◽  
...  
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Income Distribution ◽  
Local Governments ◽  
Positive Relationship ◽  
Negative Relationship ◽  
Government Officials ◽  
Government Institutions ◽  
State And Local ◽  
The Impact

In order to assess the extent to which the institutions of government in the current conditions in recent years in Russia — the activity of government officials and local governments affected economic growth, the correlation of the number of this category of workers with the growth rates of the economy was evaluated. The results show that by 2002 the positive correlation between the number of employees of state bodies and local self-government and the rate of economic growth was a negative one. The activities of employees of state and local governments began to slow down economic growth in the country. In order to assess how the change in the level of inequality of income distribution in modern Russia is due to the activities of employees of state-shock authorities and local self-government, its relation to the number of employees in this category of funds, which reflects the degree of income inequality, was evaluated. The results show that by 2011 the negative relationship between the number of employees of state bodies and local governments and the level of inequality of income distribution of growth replaced by a positive relationship. The activities of employees of state and local governments began to contribute to reducing the level of inequality of income distribution in the country.

scholarly journals The Effect of Technology Spillovers on Income Distribution: An Application on OECD Countries

2019 ◽  
Author(s):  
Neşe Algan ◽  
Erhan İşcan ◽  
Duygu Serin Oktay
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
New Technologies ◽  
Panel Data Analysis ◽  
Empirical Finding ◽  
Oecd Countries ◽  
Technology Spillovers ◽  
Economic Policies ◽  
Development Indicators ◽  
The Impact

Ensuring a fair income distribution to increase social welfare is one of the main objectives of economic policies. With the acceleration of innovations in information and communication technology in the 20th century, the developments in technology have been characterized as the main reason for growth, welfare and productivity growth. However, rapid technological developments have revealed that significant changes in the dynamics of income inequalities occur at the same time. The growth in income inequality has increased significantly in many countries recently. Accordingly, the notion that the spread of technology has led to growth in income inequality has attracted attention in recent years. In the light of this information, the aim of the study is to reveal the impact of the spread of new technologies on income inequality and the factors underlying the income inequality dynamics. Therefore, the purpose of this study is to examine the impact of technology spillovers on income inequality of selected OECD countries including Turkey using panel data analysis. The data for all countries obtained from the World Bank’s Development Indicators and OECD. Stat. The empirical conclusion indicated the effect of the technology spillovers on income inequality. This empirical finding contributed to promote the existing literature, and also draws main attention of policymakers. Because, knowing the factors underlying income inequality, which is seen as an important economic and social problem, is important in determining effective policies to ensure a more equitable income distribution.

scholarly journals Research on Property Income Inequality Effect of Fiscal Finance

Economies ◽  
2020 ◽  
Vol 8 (2) ◽  
pp. 50 ◽  
Author(s):  
Xiaozhun Peng ◽  
Hongyou Lu
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Financial Development ◽  
National Policy ◽  
Chinese Family ◽  
Inequality Decomposition ◽  
Significant Difference ◽  
Property Income ◽  
Fiscal Expenditure ◽  
The Impact

“Creating conditions for more people to have property income” has become a national policy after the 17th National Congress of the Communist Party of China. Based on the micro survey data from Chinese Family Panel Studies (CFPS) in 2010, 2012, 2014, 2016 and the macro panel data at the provincial level, a logarithmic linear equation was built to estimate the impact of micro and macro factors on property income. Furthermore, the contribution of fiscal expenditure and financial development on property income equality can be recognized using the regression-based inequality decomposition method. This research revealed that fiscal expenditure improves residents’ property income and slightly reduces the inequality of property income distribution. With respect to financial development, it improves residents’ property income but aggravates the inequality of property income distribution. However, there is a significant difference between the different regions. In eastern and central regions, inequality of property income distribution greatly benefits from fiscal expenditure, while in northwest regions, fiscal expenditure makes property income inequality even worse. Therefore, the focus of financial sustainable development is to reduce property income inequality through the establishment of an effective government and the improvement of the rule of laws.

Military Expenditures and Income Inequality

2018 ◽  
pp. 192-210
Author(s):  
Buhari Doğan ◽  
Muhlis Can ◽  
Osman Değer
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Unit Root ◽  
Cointegration Analysis ◽  
Kuznets Curve ◽  
Factors Affecting ◽  
The Usa ◽  
Military Expenditures ◽  
The Military ◽  
The Impact

Regardless of their level of developments, the income distribution problem is one of the most important economic and social problems the countries face. In recent years, scholars have performed multiple studies to determine the factors affecting income distribution. The purpose of this chapter is to examine the impact of military expenditures on income inequality in a sample of North American countries (the USA, Canada, and Mexico), within the context of the Kuznets curve. The study covers between 1995-2013. In unit root Peseran approach, in cointegration analysis, Durbin-Hausmann approach were employed. The findings show that the coefficient of the military expenditures series is positive and the coefficient of square of the military expenditures is negative. This situation shows that military expenditures first increase and then reduce income inequality. Findings indicate that there is an inverse “U” relationship between military expenditures and income inequality. Moreover, it has been detected that as economic growth increases income inequality decreases.

Does Nominal Devaluation Improve Income Distribution? Evidence from Bangladesh

2012 ◽  
Vol 19 (1) ◽  
pp. 61-77
Author(s):  
Muhammad Shahbaz ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Trade Openness ◽  
Bounds Testing ◽  
Correction Model ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

The article aims to investigate the impact of nominal devaluation on income distribution in Bangladesh both in short and long runs. In doing so, Auto Regressive Distributed Lag (ARDL) bounds testing has been employed for cointegration, and Error Correction Model (ECM) has been used for short-run dynamics. The empirical psychology has confirmed the existence of long-run relationship between the variables. Furthermore our estimated results reveal that nominal devaluation tends to decrease income inequality. Though economic growth appears to improve income distribution, non-linear link between both the variables, however, depicts Kuznets’ inverted-U curve (1955). Financial development causes further deterioration in income distribution. Trade openness contributes to income inequality as discussed in Leontief Paradox.

Sign in / Sign up

Export Citation Format

Share Document