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Publicly provided services and the distribution of households' economic resources

Author

Listed:
  • François Marical
  • Marco Mira d’Ercole
  • Maria Vaalavuo
  • Gerlinde Verbist

Abstract

Conventional income distribution statistics subtract taxes from household income but do not take into account the distributional effects of the services financed through these taxes. As many of the functions of government are available to the population free of charge or at a subsidised rate, this means that income distribution figures exaggerate the degree of inequality in the distribution of resources. This article examines the extent to which this is the case, and assesses whether statements about the relative inequality prevailing in different countries are reliable. Estimates of the impact of government services on the static distribution of household income, based on two different approaches, show that publicly-provided goods and services significantly narrow the dispersion of income inequality across countries with only small changes in the ranking of individual countries, and that the effects are larger when looking at the extremes of the distributions.

Suggested Citation

  • François Marical & Marco Mira d’Ercole & Maria Vaalavuo & Gerlinde Verbist, 2008. "Publicly provided services and the distribution of households' economic resources," OECD Journal: Economic Studies, OECD Publishing, vol. 2008(1), pages 1-38.
    • Handle: RePEc:oec:ecokac:5kzn3n2fsfq2
    DOI: 10.1787/eco_studies-v2008-art1-en
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    Cited by:

    1. Verónica Amarante & Maira Colacce & Victoria Tenenbaum, 2019. "The National Care System in Uruguay: Who Benefits and Who Pays?," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 97-122, December.
    2. Ángeles Sánchez & Antonio L. Pérez-Corral, 2018. "Government Social Expenditure and Income Inequalities in the European Union," Hacienda Pública Española / Review of Public Economics, IEF, vol. 227(4), pages 133-156, December.
    3. Michael Förster & Gerlinde Verbist, 2012. "Money or Kindergarten? Distributive Effects of Cash Versus In-Kind Family Transfers for Young Children," OECD Social, Employment and Migration Working Papers 135, OECD Publishing.
    4. Angeles Sánchez & Eduardo Jiménez-Fernández, 2023. "European Union Cohesion Policy: Socio-Economic Vulnerability of the Regions and the COVID-19 Shock," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 18(1), pages 195-228, February.
    5. Richard V. Burkhauser & Jeff Larrimore & Kosali Simon, 2013. "Measuring The Impact Of Valuing Health Insurance On Levels And Trends In Inequality And How The Affordable Care Act Of 2010 Could Affect Them," Contemporary Economic Policy, Western Economic Association International, vol. 31(4), pages 779-794, October.
    6. Markus M. Grabka & Gerlinde Verbist, 2015. "Non-cash benefits from social housing in Europe: a comparative perspective," ImPRovE Working Papers 15/07, Herman Deleeck Centre for Social Policy, University of Antwerp.
    7. Tess Penne & Irene Cussó Parcerisas & Lauri Mäkinen & Bérénice Storms & Tim Goedemé, 2016. "Can reference budgets be used as a poverty line?," ImPRovE Working Papers 16/05, Herman Deleeck Centre for Social Policy, University of Antwerp.
    8. Julio López Laborda & Carmen Marín González & Jorge Onrubia, 2020. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles. Quinto informe – Sanidad y educación, 2013 - 2017," Studies on the Spanish Economy eee2020-28, FEDEA.
    9. Verónica Amarante & Maira Colacce & Victoria Tenenbaum, 2019. "The National Care System in Uruguay: Who Benefits and Who Pays?," Population and Development Review, The Population Council, Inc., vol. 45(S1), pages 97-122, December.

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