Reference : Accounting for Differences in Income Inequality across Countries: Tax-benefit Policy,...
Scientific journals : Article
Business & economic sciences : Social economics
Computational Sciences
Accounting for Differences in Income Inequality across Countries: Tax-benefit Policy, Labour Market Structure, Returns and Demographics
Sologon, Denisa mailto [Luxembourg Institute of Socio-Economic Research - LISER]
van Kerm, Philippe mailto [University of Luxembourg > Faculty of Humanities, Education and Social Sciences (FHSE) > Department of Social Sciences (DSOC) > ; Luxembourg Institute of Socio-Economic Research - LISER]
Li, Jinjing [> >]
O'Donoghue, Cathal [> >]
Journal of Economic Inequality
Springer Verlag
[en] income inequality ; tax and transfer policy ; cross-national comparisons ; microsimulation
[en] 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 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\textquoterights 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.
Fonds National de la Recherche - FnR

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