Journal article

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..

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Awarded by Spanish Ministerio de Ciencia e Innovacion

Awarded by Xunta de Galicia

Awarded by Direct For Social, Behav & Economic Scie

Funding Acknowledgements

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).