Learning from your neighbor

Tax-benefit systems swaps in Latin America

Datos Bibliográficos

ID12836795
AutoresOlivier Bargain (0000-0003-1042-9997, Université de Bordeaux, autor de correspondencia), H Xavier Jara (0000-0001-6648-2653, Institute for Social and Economic Research), David Rodríguez (0000-0002-2274-7637, University of Essex)
Año2017
Volumen15
Número4
Páginas369-392
Fecha de publicación2017-12-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Journal of Economic Inequality (JOURNAL)
Identificadores de la revistaISSN: 1569-1721 • E-ISSN: 1573-8701
EditorialSpringer Science+Business Media (PUBLISHER • DE)
DOI10.1007/s10888-017-9367-5
OpenAlexW2781272949
IdiomaEN
Citas recibidas8
Referencias citadas18

Over the last decades, Latin American countries have experienced a noticeable decrease in income inequality. While this trend is mainly associated with a decline in wage inequality, progressive reforms of the tax-benefit systems of the region may have played a role. While redistributive systems in Latin America are still in their infancy, they are constantly expanding and do so at different pace in the region. To investigate this point in a comparative way, the present study exploits newly developed tax-benefit microsimulation models for Ecuador and Colombia. These two neighboring countries show contrasted situations in terms of income distribution and we characterize the extent to which this difference is explained by different tax-benefit systems. The comparative nature of our microsimulation models allows us to swap tax-benefit systems between countries to produce counterfactual simulations whereby the system of a country is applied to the population of the other. In this way, we can decompose the total country difference in income distribution to extract the role of different tax-benefit policies. We confirm that the Ecuadorean system is more redistributive and quantify the difference: if the Ecuadorean system was applied to the Colombian population, the Gini coefficient would be reduced by 1.7 points in Colombia. Headcount poverty would decrease by around 10% and the intensity of poverty by up to 14.7%. This analysis contributes to the recent literature on the redistributive role of tax-benefit systems in Latin America and highlights the role of microsimulation techniques to show how countries in the region can learn from each other in order to improve social protection and reduce income inequality

Demographic economics · Development economics · Economic growth · Economic inequality · Economics · Gini coefficient · Income distribution · Inequality · Latin Americans · Microsimulation · Political science · Population · Poverty · Demography · Economic Theory and Policy · Gender, Labor, and Family Dynamics · Income, Poverty, and Inequality