The distributional effects of tax-benefit policies under New Labour: a Shapley decomposition
Author
Olivier Bargain
Publication Date
Mar 2009
Abstract
Using counterfactual microsimulations, Shapley decompositions of time change in inequality and poverty indices make it possible to disentangle and quantify the relative effect of tax-benefit policy changes, compared to all other effects including shifts in the distribution of market income. Using this approach also helps to clarify the different issues underlying the distributional evaluation of policy reforms. An application to the UK (1998-2001) confirms previous findings that inequality and depth of poverty would have increased under the first New Labour government, had important reforms like the extensions of income support and tax credits not been implemented. These reforms have also contributed to substantially reduce poverty among families with children and pensioners.
Publication type
EUROMOD Working Paper Series
Series Number
EM2/09
Research areas
Family and gender, Tax and benefit systems
Notes
working paper
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