Income Inequality and Fiscal Policy (2nd Edition)

Author/Editor: Bastagli, Francesca ; Coady, David ; Gupta, Sanjeev
Publication Date: September 27, 2012
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Summary: Income inequality has increased in most advanced and many developing economies over recent decades, reflecting a range of factors including globalization and technological change. Even more striking is the large variation in average disposable (post-tax-and-transfer) income inequality across regions, much of which can be accounted for by differences in the level and progressivity of tax and spending policies. In advanced economies, fiscal policy has played a significant role in reducing income inequality, especially on the expenditure side but also through progressive income taxation. However, reforms since the mid-1990s have lessened the generosity of social benefits and the progressivity of income tax systems in these economies making fiscal policy less redistributive. This is a revised version of SDN/12/08 (published on June 28, 2012), which incorporates updated data on international Gini coefficients. Figure 1, Table 1, and Appendix Table 1 have been updated to include the new data.
Series: Staff Discussion Notes No. 12/8R
Subject(s): Developed countries | Developing countries | Fiscal consolidation | Government expenditures | Income distribution | Taxation | Unemployment

Publication Date: September 27, 2012
ISBN/ISSN: 9781475510850/2221-030X Format: Paper
Stock No: SDNEA2012008R Pages: 36
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