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Comparing Government Redistribution Across Countries: The Problem of Second‐Order Effects

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  • David K. Jesuit
  • Vincent A. Mahler

Abstract

Objective. We offer an alternative to the conventional measure of government redistribution that seeks to address problems of second‐order effects whereby income guarantees arising from public pensions make it less necessary for people to save for their retirement, rendering the “pregovernment” counterfactual to the observed postgovernment distribution unrealistic. Method. We use household‐level data from the Luxembourg Income Study to calculate an alternative measure of government redistribution that includes public‐sector pensions in “pregovernment” income alongside private‐sector pensions, on the assumption that each represents a claim on future income. Results. Employing the alternative method described in the article results in lower values for redistribution than the conventional measure. Conclusion. We suggest that our alternative method be used in addition to the conventional method in cross‐national research, in an effort to achieve a more complete understanding of government redistribution in the developed countries.

Suggested Citation

  • David K. Jesuit & Vincent A. Mahler, 2010. "Comparing Government Redistribution Across Countries: The Problem of Second‐Order Effects," Social Science Quarterly, Southwestern Social Science Association, vol. 91(5), pages 1390-1404, December.
    • Handle: RePEc:bla:socsci:v:91:y:2010:i:5:p:1390-1404
    DOI: 10.1111/j.1540-6237.2010.00737.x
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    Cited by:

    1. Schaffrin, André & Reibling, Nadine, 2015. "Household energy and climate mitigation policies: Investigating energy practices in the housing sector," Energy Policy, Elsevier, vol. 77(C), pages 1-10.
    2. Bernhard Hammer & Michael Christl & Silvia De Poli, 2020. "Redistribution across Europe: How much and to whom?," Working Papers 593, ECINEQ, Society for the Study of Economic Inequality.
    3. Malte Luebker, 2014. "Income Inequality, Redistribution, and Poverty: Contrasting Rational Choice and Behavioral Perspectives," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 133-154, March.
    4. IVASKAITE-TAMOSIUNE Viginta & THIEMANN Andreas, 2021. "The budgetary and redistributive impact of pension taxation in the EU: A microsimulation analysis," JRC Working Papers on Taxation & Structural Reforms 2021-08, Joint Research Centre.
    5. Elvire Guillaud & Matthew Olckers & Michaël Zemmour, 2020. "Four Levers of Redistribution: The Impact of Tax and Transfer Systems on Inequality Reduction," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 444-466, June.
    6. Orsetta Causa & Mikkel Hermansen, 2017. "Income redistribution through taxes and transfers across OECD countries," OECD Economics Department Working Papers 1453, OECD Publishing.
    7. Koen Caminada & Kees Goudswaard & Chen Wang & Jinxian Wang, 2019. "Income Inequality and Fiscal Redistribution in 31 Countries After the Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 119-148, March.
    8. Solt, Frederick, 2019. "Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database," SocArXiv mwnje, Center for Open Science.
    9. Frederick Solt, 2020. "Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 101(3), pages 1183-1199, May.
    10. Hammer, Bernhard & Christl, Michael & De Poli, Silvia, 2023. "Public redistribution in Europe: Between generations or income groups?," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    11. Federico Podestà & Sonia Marzadro, 2017. "Operationalizing De-commodification and De-familization Outcomes via the Relative Poverty Approach: An Application to Western European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(2), pages 701-726, March.
    12. Gerlinde Verbist & Ron Diris & Frank Vandenbroucke, 2018. "Solidarity between generations in extended families. Direction, size and intensity," Working Papers 1816, Herman Deleeck Centre for Social Policy, University of Antwerp.

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