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Accounting for Differences in Income Inequality across Countries: Ireland and the United Kingdom
Sologon, Denisa M.; VAN KERM, Philippe; Li, Jinjing et al.


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Abstract :
[en] This paper proposes 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 prices and market returns, and demographic composition in accounting for differences in income inequality across countries. Building upon EUROMOD (the European tax-benefit calculator) and its harmonized datasets, the model is portable and can be implemented for any cross-country comparisons within the EU. 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 roughly half 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.
Disciplines :
Sociology & social sciences
Social economics
Author, co-author :
Sologon, Denisa M.;  Luxembourg Institute of Socio-Economic Research - LISER
VAN KERM, Philippe  ;  University of Luxembourg > Faculty of Language and Literature, Humanities, Arts and Education (FLSHASE) > Integrative Research Unit: Social and Individual Development (INSIDE) ; Luxembourg Institute of Socio-Economic Research - LISER
Li, Jinjing;  Canberra University
O'Donoghue, Cathal;  National University of Ireland Galway
Language :
Title :
Accounting for Differences in Income Inequality across Countries: Ireland and the United Kingdom
Publication date :
Publisher :
Luxembourg Institute of Socio-Economic Research, Esch-sur-Alzette, Luxembourg
Focus Area :
Computational Sciences
Funders :
FNR - Fonds National de la Recherche [LU]
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since 28 February 2018


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