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Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018

Hérault, Nicolas and Jenkins, Stephen P. ORCID: 0000-0002-8305-9774 (2022) Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018. Journal of Income Distribution. ISSN 0926-6437 (In Press)

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Abstract

We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977–2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference (‘pre-fisc’) distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times.

Item Type: Article
Official URL: https://jid.journals.yorku.ca/index.php/jid/index
Additional Information: © 2022 The Authors
Divisions: Social Policy
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
JEL classification: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
Date Deposited: 20 Jan 2022 16:54
Last Modified: 21 Jan 2022 10:57
URI: http://eprints.lse.ac.uk/id/eprint/113491

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