Vertical and Horizontal Redistribution : The Cases of Western and Eastern Europe
European countries have the world's most redistributive tax and transfer systems. Although they have been well equipped to deal with vertical inequality -- that is, fostering redistribution from the rich to the poor -- less is known about...
| Main Authors: | , , , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/375081543509025568/Vertical-and-Horizontal-Redistribution-The-Cases-of-Western-and-Eastern-Europe http://hdl.handle.net/10986/30930 |
| Summary: | European countries have the
world's most redistributive tax and transfer
systems. Although they have been well equipped to deal with
vertical inequality -- that is, fostering redistribution
from the rich to the poor -- less is known about their
performance in dealing with horizontal inequality, that is,
in redistributing among socioeconomic groups. In a context
where individuals may not only care about vertical
redistribution, but also about the economic situation of the
specific groups to which they belong, the horizontal
dimension of redistribution becomes politically salient and
can be a source of social tensions. This paper analyzes the
performance of the 28 EU countries on redistribution across
(i) age groups, (ii) occupational groups, and (iii)
household types over 2007–2014 using counterfactual
simulation techniques. The analysis finds a great degree of
heterogeneity across countries: changes in the tax and
transfer system have particularly hit the young and losers
of occupational change in Eastern European countries, while
households with greater economic security have benefited
from these changes. The findings suggest that horizontal
inequality is a dimension that policy makers should take
into account when reforming tax and transfer systems. |
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