Economics
Income Redistribution
Income redistribution refers to the transfer of income from some individuals or groups to others, typically through government policies and programs. The aim is to reduce income inequality by providing financial assistance to those with lower incomes and imposing taxes on those with higher incomes. This process is often a key focus of economic and social policy discussions.
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6 Key excerpts on "Income Redistribution"
eBook - PDFApplying Political Theory
Issues and Debates
- Katherine Smits(Author)
- 2017(Publication Date)
- Red Globe Press(Publisher)
We should note, however, that such redistributions made to rectify historical injustices are for the most part not tied to needs or aimed at equality, and so would not reflect the kinds of programmes usually delivered via welfare. They might, however, be used to justify affirmative action policies directed at particular social or ethnic groups. TA X AT I O N , W E L FA R E A N D R E D I S T R I B U T I O N | 29 One of the more radical redistributive proposals suggested by modern politi-cal philosophers is made by leftist libertarian philosophers, who argue that we should redistribute resource wealth in order to reinforce self-ownership and liberty, through universal equal payments. Left-libertarians concede that it is not legitimate to enact this equal division in an unequal world by redistributing the gains of labour through tax because this violates self-ownership. Instead, there should be some distribution of capital – a monetary grant which represents each person’s fair share of society’s basic resources. This should be in the form of a ‘universal basic income’, which can be paid in one lump sum or through regu-lar payments (Van Parijs, 1991 ; 1995). The income would not be means-tested, because all citizens, as ‘stakeholders’ in society, are entitled to equal shares of basic resources (Ackerman and Alstott, 1999). As the allowance is a right, recipi-ents would not of course be accountable for how they spend their allowance – it would not be tied to looking for work. In 2005, the Blair Labour government in Britain introduced a simple version of the stakeholder idea with the Child Trust Fund. Under this scheme (which closed in 2011), the government paid a sum of ₤250 (twice that for lower income families) into a trust account for each child born in Britain at birth, and again at the age of seven. Advocates of the basic income argue that it should eventually be set high enough to replace other welfare benefits.
eBook - PDFThe Socio-Economic Transformation
Getting Closer to What?
- Zbigniew Nahorski, J. Owsinski, Tomasz Szapiro(Authors)
- 2007(Publication Date)
- Palgrave Macmillan(Publisher)
Part 11 Redistribution, Government, Technology, and Human Capital Chapter 5 Transition and Stability of Redistribution Policies Jean-Luc Schneider The chapter presents a simple theoretical model of a society subject to choice, expressed through voting, on a potential move away from the status quo. This move is interpreted in term of choice between (more of) capitalism and (more of) socialism, expressed through parameters corresponding to degree of equality/redistribution and economic effectiveness. Seemingly paradoxical voting behavior patterns, bearing a striking resemblance to some of the actually observed ones, are thereby explained. 5.1 Inlroduction This paper addresses the question of how a democracy chooses the level of Income Redistribution between individuals which is to be implemented in the economy. We argue that, faced with a choice between two systems, even under conditions of perfeet foresight at the time of the vote, there is no certainty that a majority of the population select what a majority of the population would agree to be the best system. In other words, a beneficial transition is not ineluctable in a democracy. To foster such transition, an outside intervention may be needed. For example, a conditional transitory financial support from an external donor may be part of the refonn package submitted to the voters. However, although aid can always induce the voters to choose the best system (as well as the worst one), there is no guarantee, in general, that a later vote will not reverse this choice. More strikingly, our model makes it possible that, even without outside intervention, the voters keep oscillating between two systems, both unstable. In the long-tenn, and if there is no constraint upon the possible redistribution levels, a democracy converges toward a stable equilibrium system. There is no guarantee that this equilibrium will be unique, and it may depend upon the initial system.
eBook - PDFThe Distributional Impact of Taxes and Transfers
Evidence From Eight Developing Countries
- Gabriela Inchauste, Nora Lustig(Authors)
- 2017(Publication Date)
- World Bank(Publisher)
Next, the analysis describes the impact on poverty, highlighting that the effects of tax and spending interventions could be redistributive but poverty increasing. This is followed by a discussion of the marginal contributions to poverty and inequality by individual tax and spending interventions. In addi-tion, the progressivity of government spending on education and health is exam-ined to better understand whether spending on these components reaches not only the middle classes but also the poor. The final section summarizes the volume’s main messages and policy implications. Annex 1A presents the 4 Overview: Fiscal Policy and Redistribution The Distributional Impact of Taxes and Transfers • http://dx.doi.org/10.1596/978-1-4648-1091-6 methodology used for the analysis, drawing heavily from the CEQ Handbook (Lustig and Higgins 2013; Lustig 2017a). Annex 1B presents details of the data and the assumptions used across case studies. Annex 1C presents the redistribu-tive effort of each fiscal intervention, that is, the marginal contribution of taxes and transfers toward reducing inequality. Budget Size, Social Spending, and Taxation A country’s redistributive potential—that is, its ability to increase household income equality—is determined first and foremost by the size and composition of its budget and how it finances government spending. The size and composi-tion of revenue and expenditures differ in important ways across our sample of countries. Figure 1.1 shows total revenue and primary spending as a share of gross domestic product (GDP) based on data sources that range from 2009 to 2013, depending on the country. Social spending includes direct transfers, non-contributory pensions, and public spending on education and health. It does not include housing subsidies or other forms of social spending.
eBook - PDFMicroeconomics
A Contemporary Introduction
- William A. McEachern(Author)
- 2016(Publication Date)
- Cengage Learning EMEA(Publisher)
We close by examining welfare reforms. Topics discussed in this chapter include: 18-1 The Distribution of Household Income In a market economy, income depends primarily on earnings, which depend on the productivity of one’s resources. The problem with allocating income according to productivity is that some people have few resources to sell. People with mental or physical disabilities or a poor education; those facing discrimination, bad luck, or the demands of caring for small children; and the elderly may be less productive and there-fore unable to earn a living. 18-1a Income Distribution by Quintiles As a starting point, let’s consider the distribution of income in the economy and see how it has changed over time, focusing on the household as the economic unit. After sorting U.S. households based on income into five groups of equal size, or quintiles , we can examine the percentage of total income received by each quintile. Such a division is presented in Exhibit 1 from 1980 to 2013. Take a moment to look over this exhibit. Notice that households in the lowest, or poorest, fifth of the population received only 4.3 percent of the income in 1980, whereas households in the highest, or richest, fifth received 43.7 percent of the income. The U.S. Census Bureau measures income after cash transfer payments are received but before taxes are paid or in-kind transfers are received (from food vouchers, Medicare, Medicaid, public housing, and employer-provided benefits). In recent decades, the share of income going to the top fifth has increased, and the share going to the bottom fifth has declined. The richest fifth’s share of income increased from 43.7 percent in 1980 to 51.0 percent in 2013.
eBook - PDFEconomics
A Contemporary Introduction
- William A. McEachern(Author)
- 2016(Publication Date)
- Cengage Learning EMEA(Publisher)
We close by examining welfare reforms. Topics discussed in this chapter include: 18-1 The Distribution of Household Income In a market economy, income depends primarily on earnings, which depend on the productivity of one’s resources. The problem with allocating income according to productivity is that some people have few resources to sell. People with mental or physical disabilities or a poor education; those facing discrimination, bad luck, or the demands of caring for small children; and the elderly may be less productive and there- fore unable to earn a living. 18-1a Income Distribution by Quintiles As a starting point, let’s consider the distribution of income in the economy and see how it has changed over time, focusing on the household as the economic unit. After sorting U.S. households based on income into five groups of equal size, or quintiles, we can examine the percentage of total income received by each quintile. Such a division is presented in Exhibit 1 from 1980 to 2013. Take a moment to look over this exhibit. Notice that households in the lowest, or poorest, fifth of the population received only 4.3 percent of the income in 1980, whereas households in the highest, or richest, fifth received 43.7 percent of the income. The U.S. Census Bureau measures income after cash transfer payments are received but before taxes are paid or in-kind transfers are received (from food vouchers, Medicare, Medicaid, public housing, and employer-provided benefits). In recent decades, the share of income going to the top fifth has increased, and the share going to the bottom fifth has declined. The richest fifth’s share of income increased from 43.7 percent in 1980 to 51.0 percent in 2013.
eBook - PDF- R. Freeman(Author)
- 2016(Publication Date)
- Palgrave Macmillan(Publisher)
Because these insurance poliCies may be self-financing (fair), the gains to producers constitute Pareto-improvements and the range of egalitarian redistribution of re- sidual claimancy and control of assets (through loans or outright trans- fers) which is consistent with global competitive equilibrium is expanded. Egalitarian asset redistribution may have other productivity enhan- cing effects, for example, supporting more effective governance insti- tutions in communities, firms, and the national level, and in promoting a more growth inducing structure of human capital accumulation. 27 Bowles: Globalization and Redistribution 2S 1 5 Policies Of course actual governments and trade unions may fail to implement efficient redistributions for a variety of well-known reasons. But on the basis of the above reasoning, there appears to be ample scope for the implementation of policies capable of raising wages, employment levels, and living standards of the less well-off owners of globally immobile factors of production, even in the empirically unlikely world of hyper- globalization posited in the model. It seems likely that substantial ma- jorities of the relevant populations would benefit from these policies, so the policies might be sustainable in democratic polities. That these objectives can be furthered by nation states acting singly is suggested by the dramatic national differences in real wage growth that have been sustained over long periods. Figure 10.7 presents data (from Verhoogen (1999)) on real manufacturing wage growth over an 22-year period. 28 Even taking account of the possible importance of productiv- ity catch-up effects (by comparing national economies initially at the same wage level) one finds extraordinary differences: the annual rate of change of real wage was 16 percentage points higher in Taiwan and S Korea than in Tanzania and 10 percentage points higher in Barbados and Italy than in Jamaica and Venezuela.
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