IDEAS home Printed from https://ideas.repec.org/p/lis/liswps/871.html
   My bibliography  Save this paper

In Search of a Paradox of Redistribution Analysis of Fiscal Redistribution in High-Income Countries

Author

Listed:
  • David Coady

Abstract

The last decade has seen a sharp increase in interest in the possible existence of a Paradox of Redistribution (PoR) whereby narrow targeting of social transfers aimed at increasing their redistributive (poverty) impact has the perverse effect of increasing poverty over the medium term due to decreasing public support for such spending. However, empirical support for the existence of a PoR has been mixed. We revisit this issue using harmonized LIS household survey data covering recent decades. Our analysis is embedded in the standard social welfare framework, which allows for an integrated and transparent evaluation of FR, making explicit the value judgements necessarily inherent in such analyses. Our results support recent findings that FR has increased over the last four decades, although we do not find support for some recent results that FR decreased since 1995. While we find strong support for a PoR for social insurance transfers (dominated by pension transfers), we find little support in the context of social assistance transfers. We argue that, in the context of social assistance, more detailed country-specific studies of the underlying political and economic dynamics are needed to adequately determine the existence or otherwise of a PoR. Our high-level analysis can, however, help to identify possible candidates for such country case studies.

Suggested Citation

  • David Coady, 2023. "In Search of a Paradox of Redistribution Analysis of Fiscal Redistribution in High-Income Countries," LIS Working papers 871, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:871
    as

    Download full text from publisher

    File URL: http://www.lisdatacenter.org/wps/liswps/871.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Coady & Emmanuel Skoufias, 2004. "On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 11-27, March.
    2. Olivier Bargain, 2017. "Welfare analysis and redistributive policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(4), pages 393-419, December.
    3. Brady, David & Finnigan, Ryan, 2014. "Does Immigration Undermine Public Support for Social Policy?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 79(1), pages 17-42.
    4. Amartya Sen, 1976. "Real National Income," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(1), pages 19-39.
    5. Brady, David & Bostic, Amie, 2015. "Paradoxes of Social Policy: Welfare Transfers, Relative Poverty, and Redistribution Preferences," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 80(2), pages 268-298.
    6. Kenworthy, Lane, 2013. "Progress for the Poor," OUP Catalogue, Oxford University Press, number 9780199676927.
    7. Mcknight, Abigail, 2015. "A fresh look at an old question: is pro-poor targeting of cash transfers more effective than universal systems at reducing inequality and poverty?," LSE Research Online Documents on Economics 103977, London School of Economics and Political Science, LSE Library.
    8. Lane Kenworthy & Jonas Pontusson, 2005. "Rising Inequality and the Politics of Redistribution in Affluent Countries," LIS Working papers 400, LIS Cross-National Data Center in Luxembourg.
    9. Abigail McKnight, 2015. "A fresh look at an old question: is pro-poor targeting of cash transfers more effective than universal systems at reducing inequality and poverty?," ImPRovE Working Papers 15/14, Herman Deleeck Centre for Social Policy, University of Antwerp.
    10. David Coady & Devin D’Angelo & Brooks Evans, 2022. "Fiscal redistribution, social welfare and income inequality: ‘doing more’ or ‘more to do’?," Applied Economics, Taylor & Francis Journals, vol. 54(21), pages 2416-2429, May.
    11. Abigail McKnight, 2015. "A fresh look at an old question: is pro-poor targeting of cash transfers more effective than universal systems at reducing inequality and poverty?," CASE Papers /191, Centre for Analysis of Social Exclusion, LSE.
    12. Philippe De Donder & Eugenio Peluso, 2018. "Politically sustainable targeted transfers," Public Choice, Springer, vol. 174(3), pages 301-313, March.
    13. Karl Ove Moene & Michael Wallerstein, 2001. "Targeting and political support for welfare spending," Economics of Governance, Springer, vol. 2(1), pages 3-24, March.
    14. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications - Books, The World Bank Group, number 6582.
    15. Mr. David Coady & Samir Jahan & Baoping Shang & Riki Matsumoto, 2021. "Guaranteed Minimum Income Schemes in Europe: Landscape and Design," IMF Working Papers 2021/179, International Monetary Fund.
    16. Abigail McKnight, 2015. "A Fresh Look at an Old Question: Is Pro-Poor Targeting of Cash Transfers More Effective Than Universal Systems at Reducing Inequality and Poverty?," LIS Working papers 640, LIS Cross-National Data Center in Luxembourg.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mr. David Coady & Devin D'Angelo & Brooks Evans, 2019. "Fiscal Redistribution and Social Welfare," IMF Working Papers 2019/051, International Monetary Fund.
    2. Coady, David & D’Angelo, Devin & Evans, Brooks, 2020. "Fiscal redistribution and social welfare: doing more or more to do?," EUROMOD Working Papers EM10/20, EUROMOD at the Institute for Social and Economic Research.
    3. Xabier Garcia-Fuente, 2021. "The Paradox of Redistribution in Time. Social Spending in 53 Countries, 1967-2018," LIS Working papers 815, LIS Cross-National Data Center in Luxembourg.
    4. Munoz de Bustillo Llorente Rafael & FERNANDEZ MACIAS Enrique & GONZALEZ VAZQUEZ Ignacio, 2020. "Universality in Social Protection: An Inquiry about its Meaning and Measurement," JRC Research Reports JRC122953, Joint Research Centre.
    5. Ben Spies-Butcher & Ben Phillips & Troy Henderson, 2020. "Between universalism and targeting: Exploring policy pathways for an Australian Basic Income," The Economic and Labour Relations Review, , vol. 31(4), pages 502-523, December.
    6. Elena Bárcena-Martín & M. Carmen Blanco-Arana & Salvador Pérez-Moreno, 2017. "Dynamics of child poverty in the European countries," Working Papers 437, ECINEQ, Society for the Study of Economic Inequality.
    7. Parolin, Zachary & Gornick, Janet C., 2021. "Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles," SocArXiv rsxz6, Center for Open Science.
    8. Zachary Parolin & Janet Gornick, 2021. "Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles," LIS Working papers 802, LIS Cross-National Data Center in Luxembourg.
    9. 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.
    10. 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.
    11. Michaël Zemmour, 2015. "Economie politique du financement progressif de la protection sociale," Working Papers hal-01205217, HAL.
    12. Rambotti, Simone, 2020. "Is there a relationship between welfare-state policies and suicide rates? Evidence from the U.S. states, 2000–2015," Social Science & Medicine, Elsevier, vol. 246(C).
    13. repec:hal:spmain:info:hdl:2441/4596cgacdn8svqf2eog4tv7b2i is not listed on IDEAS
    14. Koen Caminada & Chen Wang, 2011. "Disentangling Income Inequality and the Redistributive Effect of Social Transfers and Taxes in 36 LIS Countries," LIS Working papers 567, LIS Cross-National Data Center in Luxembourg.
    15. Shintaro Kurachi, 2016. "The Process of Universalism in the Danish Welfare System: The multi-tiered need's testing system in Denmark," Keio-IES Discussion Paper Series 2016-006, Institute for Economics Studies, Keio University.
    16. Rambotti, Simone, 2015. "Recalibrating the spirit level: An analysis of the interaction of income inequality and poverty and its effect on health," Social Science & Medicine, Elsevier, vol. 139(C), pages 123-131.
    17. Sebastian Sirén, 2024. "Making Growth Inclusive? Do Government Transfers Moderate the Effect of Economic Growth on Absolute and Relative Child Poverty?," LIS Working papers 879, LIS Cross-National Data Center in Luxembourg.
    18. Louis Chauvel & Eyal Bar-Haim, 2016. "Varieties of Capitalism (VoC) and Varieties of Distributions (VoD): How Welfare Regimes Affect the Pre- and Post-Transfer Shapes of Inequalities?," LIS Working papers 677, LIS Cross-National Data Center in Luxembourg.
    19. Skoufias, Emmanuel & Lindert, Kathy & Shapiro, Joseph, 2010. "Globalization and the Role of Public Transfers in Redistributing Income in Latin America and the Caribbean," World Development, Elsevier, vol. 38(6), pages 895-907, June.
    20. Della Guardia, Anne & Lake, Milli & Schnitzer, Pascale, 2022. "Selective inclusion in cash transfer programs: Unintended consequences for social cohesion," World Development, Elsevier, vol. 157(C).
    21. Victor Amoureux & Elvire Guillaud & Michaël Zemmour, 2019. "It Takes Two to Tango Income and Payroll Taxes in Progressive Tax Systems," SciencePo Working papers Main hal-02735278, HAL.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lis:liswps:871. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Paradowski (email available below). General contact details of provider: https://edirc.repec.org/data/lisprlu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.