Understanding Changes in the Distribution and Redistribution of Income: A Unifying Decomposition Framework
Nicolas Herault, Francisco Azpitarte
Review of Income and Wealth | Wiley | Published : 2016
In recent decades income inequality has increased in many developed countries but the role of tax and transfer reforms is often poorly understood. We propose a new method allowing for the decomposition of historical changes in income distribution and redistribution measures into: (i) the immediate effect of tax-transfer policy reforms in the absence of behavioral responses; (ii) the effect of labor supply responses induced by these reforms; and (iii) a third component allowing us to explore the effect of changes in the distribution of a wide range of determinants, including the effect of employment changes not induced by policy reforms. The application of the decomposition to Australia revea..View full abstract
Awarded by Spanish Ministerio de Ciencia e Innovacion
Awarded by Xunta de Galicia
We acknowledge support from a Faculty Research Grant from the Faculty of Business and Economics, University of Melbourne. Francisco Azpitarte would also like to acknowledge the financial support from the Brotherhood of St Laurence and the Spanish Ministerio de Ciencia e Innovacion (grant ECO2013-46516-C4-2-R and ECO2010-21668-C03-03) and the Xunta de Galicia (10SEC300023PR).