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GINI DP 23: Automatic Stabilizers, Economic Crisis and Income Distribution in Europe

Author

Listed:
  • Dolls, M.
  • Fuest, C.
  • Andreas Peichl

    (Institute for the Study of Labor (IZA))

Abstract

This paper investigates to what extent the tax and transfer systems in Europe protect households at different income levels against losses in current income caused by economic downturns like the present financial crisis. We use a multi country micro simulation model to analyse how shocks on market income and employment are mitigated by taxes and transfers. We find that the aggregate redistributive effect of the tax and transfer systems increases in response to the shocks. But the extent to which households are protected differs across income levels and countries. In particular, there is little stabilization of disposable income for low income groups in Eastern and Southern European countries.

Suggested Citation

  • Dolls, M. & Fuest, C. & Andreas Peichl, 2011. "GINI DP 23: Automatic Stabilizers, Economic Crisis and Income Distribution in Europe," GINI Discussion Papers 23, AIAS, Amsterdam Institute for Advanced Labour Studies.
    • Handle: RePEc:aia:ginidp:23
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    References listed on IDEAS

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    Cited by:

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    2. Schwander, Hanna, 2015. "Labor market risks in times of welfare state transformation," TranState Working Papers 192, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    3. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.
    4. Brzezinski, Michal, 2018. "Income inequality and the Great Recession in Central and Eastern Europe," Economic Systems, Elsevier, vol. 42(2), pages 219-247.
    5. Muinelo-Gallo, Leonel, 2022. "Business cycles and redistribution: The role of government quality," Economic Systems, Elsevier, vol. 46(4).

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