Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/68002 
Year of Publication: 
2007
Series/Report no.: 
ESRI Working Paper No. 197
Publisher: 
The Economic and Social Research Institute (ESRI), Dublin
Abstract: 
To assess the impact of tax-benefit policy changes on income distribution over time, we suggest a decomposition methodology based on counterfactual simulations. First, it provides an absolute measure of the impact of tax-benefit changes on inequality, which combines changes in policy structure (rules, rates, etc.) and changes in monetary parameters (benefit amounts, tax bands, etc.) against a distributionally-neutral benchmark, i.e., a situation where monetary parameters are nominally adjusted in line with income growth. We apply this measure to analyze the effect of recent policy changes in twelve European countries. Secondly, we focus on France and Ireland to assess the relative role of policy changes compared to changes in pre-tax income (distribution, composition, demographic structure, etc.). We conduct this exercise for a battery of poverty and inequality measures and check the sensitivity of the results to the decomposition order.
Subjects: 
Tax-benefit policy
inequality
poverty
decomposition
microsimulation
JEL: 
H23
H53
I32
Document Type: 
Working Paper

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