## Fiscal Monitor, October 2017: Tackling Inequality

_Fiscal Monitor, October 11, 2017_

## Source details

**Canonical URL:** [Fiscal Monitor, October 2017: Tackling Inequality](https://www.imf.org/en/publications/fm/issues/2019/09/27/fiscal-monitor-october-2017-tackling-inequality-45124)

## Other formats

- [Markdown version](/en/publications/fm/issues/2019/09/27/fiscal-monitor-october-2017-tackling-inequality-45124/index.md)
- [Structured JSON version](/en/publications/fm/issues/2019/09/27/fiscal-monitor-october-2017-tackling-inequality-45124/index.json)
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## Bibliographic details
- Published: October 11, 2017
- Series: Fiscal Monitor
- DOI: https://doi.org/10.5089/9781484312483.089

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### Overview
- At the global level, inequality has declined substantially over the past three decades, but within national boundaries the picture is mixed: some countries have experienced a reduction in inequality while others, particularly advanced economies, have seen a significant increase that has contributed to growing public backlash against globalization.
- Excessive levels of inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth; whether inequality is excessive depends on country-specific factors, including the growth context in which inequality arises, along with societal preferences.
- This Fiscal Monitor focuses on how fiscal policy can help governments address high levels of inequality while minimizing potential trade-offs between efficiency and equity.

### Key findings on inequality and fiscal redistribution
- Documents recent trends in income inequality, including inequality both between and within countries.
- Examines the redistributive role of fiscal policies over recent decades and underscores the importance of appropriate design to minimize any efficiency costs.
- Focuses on key components of fiscal redistribution: progressivity of income taxation, universal basic income, and public spending policies for achieving more equitable education and health outcomes.

### Analytical approach and evidence base
- Relies on existing theoretical and empirical literature, IMF work on inequality and fiscal policy, and country experiences.
- Incorporates new analytical work, including various static microsimulation analyses based on household survey data.
- Uses simulations with a dynamic general equilibrium model calibrated to country-specific data and behavioral parameters to illustrate the potential impact of alternative budget-neutral tax and transfer measures on income inequality and economic growth.

### Policy implications and areas of focus
- Fiscal policy can be designed to address high levels of inequality while minimizing efficiency trade-offs; appropriate design is emphasized throughout the analysis.
- Examines the progressivity of income taxation as a tool for redistribution.
- Considers universal basic income (UBI) as one fiscal option analyzed in the report.
- Highlights public spending policies aimed at more equitable education and health outcomes as central to reducing inequality.

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_Source: https://www.imf.org/en/publications/fm/issues/2019/09/27/fiscal-monitor-october-2017-tackling-inequality-45124_