IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/91104.html
   My bibliography  Save this paper

The effect of government social spending on income inequality in oecd: a panel data analysis

Author

Listed:
  • Ulu, Mustafa Ilker

Abstract

Income inequality is one of the issue which is most discussed and struggled for its solution throughout the history of economics. Since the 1990s, income inequality has increased in most of the OECD (The Organisation for Economic Co-operation and Development) countries as in the whole world. Government social spending is one of the most important means of directly regulating income inequality. This study investigated the effect of goverment social spending on income inequaltiy for 21 OECD countries by analyzing Panel Data. According to the findings obtained, government social spending affect income inequality positively. Income inequality decreases when the government social spending increase. It has been proved that government social spending was more effective than education expenditures in regulating income inequality. It is also understood that unemployment and population growth affected the income inequality negatively. Besides, there is a negative relationship between openness, education expenditures, elderly population, education participation and income inequality.

Suggested Citation

  • Ulu, Mustafa Ilker, 2018. "The effect of government social spending on income inequality in oecd: a panel data analysis," MPRA Paper 91104, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:91104
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/91104/1/The%20Effect%20of%20Government%20Social%20Spending%20on%20Income%20Inequality%20in%20OECD_%20A%20Panel%20Data%20Analysis%5B%23462330%5D-554520.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. José De Gregorio & Jong–Wha Lee, 2002. "Education and Income Inequality: New Evidence From Cross‐Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    2. Olivier Bargain & Karina Doorley, 2009. "Caught in the Trap? The Disincentive Effect of Social Assistance," Working Papers 200906, School of Economics, University College Dublin.
    3. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 95-130, March.
    4. Willem Adema & Pauline Fron & Maxime Ladaique, 2011. "Is the European Welfare State Really More Expensive?: Indicators on Social Spending, 1980-2012; and a Manual to the OECD Social Expenditure Database (SOCX)," OECD Social, Employment and Migration Working Papers 124, OECD Publishing.
    5. Mr. Ke-young Chu & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Income Distribution and Tax and Government Social Spending Policies in Developing Countries," IMF Working Papers 2000/062, International Monetary Fund.
    6. Hongyi Li & Danyang Xie & Heng‐Fu Zou, 2000. "Dynamics of income distribution," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(4), pages 937-961, November.
    7. repec:unu:wpaper:wp2012-03 is not listed on IDEAS
    8. A. B. Atkinson, 2003. "Income Inequality in OECD Countries: Data and Explanations," CESifo Economic Studies, CESifo Group, vol. 49(4), pages 479-513.
    9. Barr, Nicholas, 2004. "Economics of the Welfare State," OUP Catalogue, Oxford University Press, edition 4, number 9780199264971.
    10. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    11. Milanovic, Branko, 2002. "Can we discern the effect of globalization on income distribution? evidence from household budget surveys," Policy Research Working Paper Series 2876, The World Bank.
    12. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    13. Gerardo Ángeles Castro, 2011. "The Effect of Trade and Foreign Direct Investment on Inequality: Do Governance and Macroeconomic Stability Matter?," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 181-219, January-J.
    14. Avik Chakrabarti, 2000. "Does Trade Cause Inequality?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(2), pages 1-21, December.
    15. Saurav Dev Bhatta, 2002. "Has the increase in world-wide openness to trade worsened global income inequality?," Review of Economic Design, Springer;Society for Economic Design, vol. 81(2), pages 177-196, April.
    16. Ke-Young Chu & Hamid Davoodi & Sanjeev Gupta, 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," WIDER Working Paper Series wp-2000-214, World Institute for Development Economic Research (UNU-WIDER).
    17. Zhu, Susan Chun & Trefler, Daniel, 2005. "Trade and inequality in developing countries: a general equilibrium analysis," Journal of International Economics, Elsevier, vol. 65(1), pages 21-48, January.
    18. Calderon, Cesar & Chong, Alberto, 2001. "External sector and income inequality in interdependent economies using a dynamic panel data approach," Economics Letters, Elsevier, vol. 71(2), pages 225-231, May.
    19. Miguel Szekely & Claudia Sámano, 2012. "Did Trade Openness Affect Income Distribution in Latin America? Evidence for the Years 1980-2010," WIDER Working Paper Series wp-2012-003, World Institute for Development Economic Research (UNU-WIDER).
    20. Saurav Dev Bhatta, 2002. "Has the increase in world-wide openness to trade worsened global income inequality?," Economics of Governance, Springer, vol. 81(2), pages 177-196, April.
    21. Sylwester, Kevin, 2002. "Can education expenditures reduce income inequality?," Economics of Education Review, Elsevier, vol. 21(1), pages 43-52, February.
    22. Sámano, Claudia & Szekely, Miguel, 2012. "Did Trade Openness Affect Income Distribution in Latin America? Evidence for the Years 1980-2010," WIDER Working Paper Series 003, World Institute for Development Economic Research (UNU-WIDER).
    23. Katarina R.I. Keller, 2010. "How can education policy improve income distribution? an empirical analysis of education stages and measures on income inequality," Journal of Developing Areas, Tennessee State University, College of Business, vol. 43(2), pages 51-77, January-M.
    24. Xiaobo Zhang & Kevin Zhang, 2003. "How Does Globalisation Affect Regional Inequality within A Developing Country? Evidence from China," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 47-67.
    25. Chu, Ke-Young & Davoodi, Hamid & Gupta, Sanjeev, 2000. "Income Distribution and Tax, and Government Social Spending Policies in Developing Countries," WIDER Working Papers 295547, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    26. Saurav Dev Bhatta, 2002. "Has the increase in world-wide openness to trade worsened global income inequality?," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(2), pages 177-196.
    27. A.B. Atkinson & F. Bourguignon (ed.), 2000. "Handbook of Income Distribution," Handbook of Income Distribution, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Renata Halaskova & Pavel Bednar, 2020. "Relationship of Social Protection Expenditures and Socio-economic Indicators: A Panel Data Analysis of the EU Countries," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(2), pages 19-31.
    2. Md Jamil, Abd Rahim & Law, Siong Hook & Khair-Afham, M.S. & Trinugroho, Irwan, 2024. "Financial inclusion and income inequality in developing countries: The role of aging populations," Research in International Business and Finance, Elsevier, vol. 67(PA).
    3. Marina da Silva Sanches & Laura Barbosa de Carvalho, 2023. "Multiplier effects of social protection: a SVAR approach for Brazil," International Review of Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 93-112, January.
    4. Can Verberi & Sema Yasar, 2021. "The Effects of Social Spending on Income Inequality in 30 OECD Countries," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 71(1), pages 39-57, June.
    5. Minjong Youn & Chungseo Kang, 2023. "The Role of the Welfare State for NEETs: Exploring the Association Between Public Social Spending and NEET in European Countries," SAGE Open, , vol. 13(3), pages 21582440231, September.

    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. Djeneba Doumbia & Mr. Tidiane Kinda, 2019. "Reallocating Public Spending to Reduce Income Inequality: Can It Work?," IMF Working Papers 2019/188, International Monetary Fund.
    2. Oueslati, Walid & Zipperer, Vera & Rousselière, Damien & Dimitropoulos, Alexandros, 2017. "Energy taxes, reforms and income inequality: An empirical cross-country analysis," International Economics, Elsevier, vol. 150(C), pages 80-95.
    3. Bukhari, Mahnoor & Munir, Kashif, 2016. "Impact of Globalization on Income Inequality in Selected Asian Countries," MPRA Paper 74248, University Library of Munich, Germany.
    4. Kyriacou, Andreas & Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2015. "On the redistributive efficiency of fiscal policy," MPRA Paper 63276, University Library of Munich, Germany.
    5. Noman Arshed & Awais Anwar & Nabeela Kousar & Samra Bukhari, 2018. "Education Enrollment Level and Income Inequality: A Case of SAARC Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(3), pages 1211-1224, December.
    6. Isabelle Bensidoun & Sébastien Jean & Aude Sztulman, 2011. "International trade and income distribution: reconsidering the evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 593-619, November.
    7. Emil Tesliuc & Margaret Grosh & Azedine Ouerghi & Carlo del Ninno, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications - Books, The World Bank Group, number 6582.
    8. Edward Anderson & Maria Ana Jalles D'Orey & Maren Duvendack & Lucio Esposito, 2017. "Does Government Spending Affect Income Inequality? A Meta-Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 961-987, September.
    9. Dhital, Saroj & Jiang, Senyuan & Reese, Jillian, 2023. "Effects of monetary and government spending policy on economic inequality," Journal of Macroeconomics, Elsevier, vol. 77(C).
    10. John C. Anyanwu, 2016. "Empirical Analysis of the Main Drivers of Income Inequality in Southern Africa," Annals of Economics and Finance, Society for AEF, vol. 17(2), pages 337-364, November.
    11. Sonali Jain-Chandra & Tidiane Kinda & Kalpana Kochhar & Shi Piao & Johanna Schauer, 2019. "Sharing the Growth Dividend: Analysis of Inequality in Asia," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 5-28, September.
    12. Conrad Scheibe, 2016. "Fiscal Consolidations and Their Effects on Income Inequality," UCL SSEES Economics and Business working paper series 2016-4, UCL School of Slavonic and East European Studies (SSEES).
    13. Vivien Kappel, 2010. "The Effects of Financial Development on Income Inequality and Poverty," CER-ETH Economics working paper series 10/127, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    14. Sanjeev Gupta & João Tovar Jalles, 2020. "Tax Revenue Reforms and Income Distribution in Developing Countries," Working Papers REM 2020/0137, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    15. Parro, Francisco, 2024. "Unveiling the impact of income taxes on inequality in a HACT model," Journal of Macroeconomics, Elsevier, vol. 79(C).
    16. John Obiora Anyaduba & Praise Oghenefejiro Otulugbu, 2019. "Taxation and Income Inequality in Nigeria," Accounting and Finance Research, Sciedu Press, vol. 8(3), pages 118-118, August.
    17. Ms. Sonali Jain-Chandra & Niny Khor & Rui Mano & Johanna Schauer & Mr. Philippe Wingender & Juzhong Zhuang, 2018. "Inequality in China – Trends, Drivers and Policy Remedies," IMF Working Papers 2018/127, International Monetary Fund.
    18. Kalle Hirvonen & Giulia Mascagni & Keetie Roelen, 2018. "Linking taxation and social protection: Evidence on redistribution and poverty reduction in Ethiopia," International Social Security Review, John Wiley & Sons, vol. 71(1), pages 3-24, January.
    19. Palić Irena & Hodžić Sabina & Dumičić Ksenija, 2019. "Personal Income Taxation Determinants in Federation of Bosnia and Herzegovina," Business Systems Research, Sciendo, vol. 10(1), pages 153-163, April.
    20. Cont, Walter & Porto, Alberto, 2014. "Personal and regional redistribution through public finance in a federal setting," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 563-578.

    More about this item

    Keywords

    Income Inequality; Government Social Spending; Panel Data Analysis;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

    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:pra:mprapa:91104. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.