Four profiles of inequality and tax redistribution in Europe

Frederico Cantante

doi:10.1057/s41599-020-0514-4

Abstract

The rise of economic inequality in the past few decades is one of the most relevant phenomena in western countries recent history. Market income distribution pushed inequality up and challenged welfare state capacity to deal with economic gaps. Market inequality or gross income inequality are considerably higher than disposable income inequality. This has to do with redistributive state policies. This paper analyses gross income inequality in the EU countries and measure the impact of personal taxes on income distribution. Several measures of redistributive tax impact on income inequality will be explored. Having in consideration both the level of gross income inequality and the impact of personal taxes on top shares, a typology of income distribution and redistribution in Europe will be drawn.

Highlights

The rise of economic inequality in the past few decades is one of the most relevant phenomena in western countries recent history
Introduction: inequality, here and Income inequality in most western countries has been rising in the last decades
This paper will focus on income inequality in European countries and the redistributive impact personal taxation has on inequality

Summary

Introduction

The rise of economic inequality in the past few decades is one of the most relevant phenomena in western countries recent history. This paper analyses gross income inequality in the EU countries and measure the impact of personal taxes on income distribution. Inequality can warm the way societies function (Wilkinson and Pickett, 2009) and have negative effects on life trajectories and opportunities In this sense, growing inequality must be addressed both as a normative problem that challenges distributive justice, and as a social, economic, and political risk. If the number of highly skilled workers does not keep up with their demand, their pay premium will rise above average earnings and pay inequality widens This theory has a “nuanced view” (Kierzenkowski and Koske, 2012), according to which globalisation fosters the opposition between the highly qualified workforce and the routine manual workers, because the tasks performed by the later can be done in low wage countries. Globalisation and technology-driven inequality are two interdependent phenomena (Milanovic, 2016)

Objectives

Methods

Findings

Conclusion