Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Distribution and Redistribution F14-V3
This paper explores if 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 bene ts, particularly unemployment bene ts and public pensions are responsible for the inequality reducing impact. More targeted bene ts, however, do not signi cantly redue income inequality. Rather, their positive effect on pregovernment income inequality hints at substantial disinctive effects.
tax benefit system redistribution income inequality