Cok, Mitja and Urban, Ivica and Verbič, Miroslav (2012): Income redistribution through taxes and social benefits: the case of Slovenia and Croatia.
Download (486kB) | Preview
The article analyses the redistributive effect attained by personal income tax, social security contributions and social benefits in Slovenia and Croatia. The redistributive effect is decomposed first to reveal progressivity and horizontal inequity effects, and further to show contributions of different tax and benefit instruments. Even though both countries started from the same socioeconomic background two decades ago, the current results reveal divergence that is a consequence of diverse development during this period. The results indicate that Croatia experienced significantly higher pre-fiscal income inequality and lower redistributive effect than Slovenia. Horizontal inequity effects, though, were higher in Slovenia than in Croatia. In both countries, the means-tested social benefits exerted an over-proportionate influence on vertical effects, suggesting a strong impact of the welfare state on income position of their residents, but also induced a large amount of horizontal inequity. In Slovenia, the non-means-tested benefits slightly increased income inequality.
|Item Type:||MPRA Paper|
|Original Title:||Income redistribution through taxes and social benefits: the case of Slovenia and Croatia|
|Keywords:||redistributive effect; horizontal inequity; taxes and benefits; decomposition; Slovenia; Croatia|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
D - Microeconomics > D3 - Distribution > D33 - Factor Income Distribution
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
|Depositing User:||Miroslav Verbic|
|Date Deposited:||21. May 2012 02:58|
|Last Modified:||19. Feb 2013 19:42|
Atkinson, A. B. (1970) On the Measurement of Inequality, Journal of Economic Theory, 2, 244–263.
Atkinson, A. B. (1980) Horizontal Equity and the Distribution of the Tax Burden, in The Economics of Taxation, (Eds.) H. J. Aaron and M. J. Boskins, Brookings Institution Press, Washington, DC, 3–18.
Bićanić, I., Hoffman, S. D. and Vukoja, O. (2010) Croatian Wage Inequality and Wage Differentials, 1970-2008: Measurement and Determinants, Working Paper No. 3, Department of Economics, Alfred Lerner College of Business and Economics, University of Delaware, DE.
Donaldson, D. and Weymark, J. (1980) A Single-Parameter Generalization of Gini Indices of Inequality, Journal of Economic Theory, 22, 67–86.
Duclos, J.-Y. and Lambert, P. J. (2000) A Normative and Statistical Approach to Measuring Classical Horizontal Inequity, Canadian Journal of Economics, 33, 87–113.
Duclos, J.-Y., Jalbert, V. and Araar, A. (2003) Classical Horizontal Inequity and Reranking: An Integrated Approach, Research on Economic Inequality, 10, 65–100.
Duclos, J.-Y. and Araar, A. (2006) Poverty and Equity: Measurement, Policy and Estimation with DAD, Kluwer Academic Publishers, Boston, MA.
Kakwani, N. C. (1984) On Measurement of Taxes, Progressivity and Redistributive Effect of Taxes with Applications to Horizontal and Vertical Equity, Advances in Econometrics, 3, 149–168.
Lerman, R. I. and Yitzhaki, S. (1985) Income Inequality Effects by Income Source: A New Approach and Applications to the United States. Review of Economics and Statistics, 67, 151–156.
Nestić, D. (2005) Income Distribution in Croatia: What Do the Household Budget Survey Data Tell Us?, Financial Theory and Practice, 29, 59–73.
Plotnick, R. (1981) A Measure of Horizontal Inequity, Review of Economics and Statistics, 63, 283–288.
Stanovnik, T. and Čok, M. (2009) The Transition Process and Changes in Income, Income Inequality and Poverty: The Case of Slovenia, in Activity, Incomes and Social Welfare: A Comparison Across Four New EU Member States, (Eds.) M. Stǎnculescu and T. Stanovnik, Ashgate Publishing, Farnham, 231–267.
Stanovnik, T. and Verbič, M. (2005) Wage and Income Inequality in Slovenia, 1993–2002, Post-Communist Economies, 17, 381–397.
Stanovnik, T. and Verbič, M. (2012) The Distribution of Wages and Employee Incomes in Slovenia, 1991–2009, IER Working Paper No. 60, Institute for Economic Research, Ljubljana.
Urban, I. (2011) Duclos-Jalbert-Araar Decomposition of Redistributive Effect: Implementation Issues, MPRA Paper No. 32841, Munich University Library, University of Munich, Munich.
Urban, I. (2012) Contributions of Taxes and Benefits to Vertical, Horizontal and Redistributive Effects, Mimeo, Institute of Public Finance, Zagreb.
World Bank (2007) Croatia: Living Standards Assessment, Volume 2: Promoting Social Inclusion and Regional Equity, World Bank Publications, Washington, DC.
Yitzhaki, S. (1983) On an Extension of the Gini Inequality Index, International Economic Review, 24, 617–628.