Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173465
Authors: 
Schneider, Markus P. A.
Kinsella, Stephen
Godin, Antoine
Year of Publication: 
2015
Series/Report no.: 
Working Paper No. 856
Abstract: 
We examine the relationship between changes in a country's public sector fiscal position and inequality at the top and bottom of the income distribution during the age of austerity (2006-13). We use a parametric Lorenz curve model and Gini-like indices of inequality as our measures to assess distributional changes. Based on the EU's Statistics on Income and Living Conditions SLIC and International Monetary Fund data for 12 European countries, we find that more severe adjustments to the cyclically adjusted primary balance (i.e., more austerity) are associated with a more unequal distribution of income driven by rising inequality at the top. The data also weakly suggest a decrease in inequality at the bottom. The distributional impact of austerity measures reflects the reliance on regressive policies, and likely produces increased incentives for rent seeking while reducing incentives for workers to increase productivity.
Subjects: 
Inequality
Austerity
Europe
Fiscal Policy
Lorenz Curve
JEL: 
D31
D63
E62
E65
H6
Document Type: 
Working Paper

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