Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280113 
Year of Publication: 
2021
Series/Report no.: 
Discussion paper No. 122
Version Description: 
December 2021 (previous version December 2018)
Publisher: 
Aboa Centre for Economics (ACE), Turku
Abstract: 
This paper introduces a new method of analysing how the changes in the tax-benefit-system have been reflected in income inequality. This method is a combination of microsimulation based decomposition (Bar gain and Callan, 2010) and a multivariate regression based decompo sition (Fields, 2003; Yun, 2006). It allows analysis of how the policy changes have affected the importance of different individual character istics in income inequality. With the variance of log of incomes, the decomposition can be made further to separate the changes directly related to policy decisions from the overall price- and residual effects. This method is applied to analyse the evolution of income inequality in Finland from 1993 to 2014.
Subjects: 
income inequality
microsimulation
regression
tax-benefit system
decomposition
JEL: 
D31
H24
Document Type: 
Working Paper

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