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Welfare type and income inequality: an income source decomposition including in-kind benefits and cash-transfers entitlement
[journal article]
Abstract This paper aims to understand whether a shift towards a more balanced cash transfer and service-based welfare system is valuable in terms of reducing income inequality and what factors mostly contribute to the income inequality evolution. To examine this, I first impute the monetary values of in-kin... view more
This paper aims to understand whether a shift towards a more balanced cash transfer and service-based welfare system is valuable in terms of reducing income inequality and what factors mostly contribute to the income inequality evolution. To examine this, I first impute the monetary values of in-kind benefits and then reassess Gini coefficients across countries and welfare regimes. I also compare the role of cash transfers by functions and, more importantly, by how they are allocated. By means of factor source decomposition, the elasticities confirm wages as being the income source that creates most inequalities, while taxes play the most equalising role together with cash transfers. However, universal services such as healthcare and compulsory education outperform most of the cash transfers included in the analysis, with a stronger effect in the Mediterranean countries. Although in-kind services play a marginal role in explaining the changes in the Gini coefficient between 2008 and 2017, results suggest that a coordinated view of cash transfers and public services, as well as increasing the share of non-contributory means tested transfers, can reduce income inequality in all welfare regimes.... view less
Keywords
transfer of money; difference in income; income situation; inequality; contribution in kind; social benefits; social assistance
Classification
Social Security
Income Policy, Property Policy, Wage Policy
Free Keywords
income inequality; inequality measurement; EU-SILC 2008; EU-SILC 2017
Document language
English
Publication Year
2022
Page/Pages
p. 1-37
Journal
International Tax and Public Finance (2022)
DOI
https://doi.org/10.1007/s10797-022-09772-8
ISSN
1573-6970
Status
Published Version; peer reviewed