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Income distribution determinants and public spending efficiency

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  • Afonso, António
  • Schuknecht, Ludger
  • Tanzi, Vito

Abstract

In this paper we examine the impact of public spending, education, and institutions on income distribution in advanced economies. We also assess the efficiency of public spending in redistributing income by using a DEA (Data Envelopment Analysis) nonparametric approach. We find that public policies significantly affect income distribution, notably via social spending, and indirectly via high quality education/human capital and via sound economic institutions. Moreover, for our set of OECD countries, and within a two-step approach, several so-called non-discretionary factors help explaining public social spending inefficiencies. JEL Classification: C14, H40, H50

Suggested Citation

  • Afonso, António & Schuknecht, Ludger & Tanzi, Vito, 2008. "Income distribution determinants and public spending efficiency," Working Paper Series 861, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2008861
    Note: 175489
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    More about this item

    Keywords

    DEA; efficiency; income redistribution; public spending;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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