Is Fiscal Progressivity Enhanced by Redistribution in Kind

This paper considers the redistributive effects of four mixed fiscal systems in which redistribution in cash is combined with redistribution in kind. A private good is offered by both the public and the private sector, at a non‐zero price in both cases, so that the market is vertically segmented and the quality differences are used to select recipients on the basis of their income. This paper shows how an appropriate selection of recipients can add redistributive power to an already redistributive taxation system, while universal public provision never does. A numerical simulation gives some policy insights

Adverse selection · Cash · Economics · Macroeconomics · Microeconomics · Monetary economics · Public economics · Public good · Redistribution (election · Redistribution of income and wealth · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization