The Impact of Fiscal Policy on Inequality and Poverty in Chile
This paper applies a comprehensive tax-benefit incidence analysis to estimate the distributional effects of fiscal policy in Chile in 2013. Four results are indicative of an overall positive net effect of fiscal interventions on poverty and inequal...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/924981484072376329/The-impact-of-fiscal-policy-on-inequality-and-poverty-in-Chile http://hdl.handle.net/10986/25948 |
| Summary: | This paper applies a comprehensive
tax-benefit incidence analysis to estimate the
distributional effects of fiscal policy in Chile in 2013.
Four results are indicative of an overall positive net
effect of fiscal interventions on poverty and inequality.
First, subsidies exert a positive, yet modest effect on
poverty and inequality, whereas direct transfers are
progressive, equalizing, and reduce the poverty headcount by
4 to 5 percentage points, depending on the poverty line
used. Second, although social contributions are unequalizing
and poverty-increasing, direct taxes on personal income are
equalizing and poverty-neutral, whereas indirect taxes are
poverty-increasing but exert a counterintuitive, yet
feasible equalizing effect known as Lambert's
conundrum. Third, social spending on tertiary education is
slightly equalizing but it is not pro-poor, contrary to the
effects of social spending on basic and secondary education
and health, which are not only equalizing but also pro-poor.
Finally, the net effect of Chile's tax/transfer system
leaves fewer individuals impoverished relative to the number
of fiscal gainers, and the magnitude of monetary fiscal
gains is significantly higher than that of fiscal impoverishment. |
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