by Christian Toft (University of Kassel)
Abstract
The presentation analyses similarities and differences between the US and the EU as well as within the EU in the distributional impact of tax-benefit systems and the individual programmes constituting the systems. A wide comparative literature exists analysing the overall impact of tax-benefit systems on the degree of income inequality. The standard approach is to compare the size of the Gini coefficient of market income with the Gini coefficient of disposable income with the difference between the two coefficients being ascribed or credited to the tax-benefit system or the “welfare state”. This presentation pursues a more disaggregated approach, aiming to detect the impact of the individual policy programmes or policy measures on income inequality. Two different starting points and related methodologies are being pursued. First inspired by Rao, Lerman and Yitzhaki and others I take the starting point in the Gini coefficient of disposable income and perform a source decomposition. Second inspired by Kakwani, Lambert, Pfähler, Duclos and others I take the starting point in the Gini coefficient of market income and investigate how tax-benefit schemes impact on this coefficient. The data are drawn from EUROMOD, LIS, and national data bases.