Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/150881 
Authors: 
Year of Publication: 
2010
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 336
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This paper explores whether more generous social spending polices in fact lead to less income inequality, or if redistributive outcomes are offset by behavioral disincentive effects. To account for the inherent endogeneity of social policies with regard to inequality levels, I apply the System GMM estimator and use the presumably random incidence of certain diseases as instruments for social spending levels. The regression results suggest that more social spending effectively reduces inequality levels. The result is robust with respect to the instrument count and different data restrictions. Looking at the structure of benefits, particularly unemployment benefits and public pensions are responsible for the inequality reducing impact. More targeted benefits, however, do not significantly reduce income inequality. Rather, their positive effect on pre-government income inequality hints at substantial disinctive effects.
Subjects: 
Social Benefits
Redistribution
Income Inequality
System GMM
JEL: 
D31
D60
H20
Document Type: 
Working Paper

Files in This Item:
File
Size
408.82 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.