Abstract
We apply the Kakwani approach to decomposing redistributive effect intoaverage rate, progressivity, and reranking components, using yearly datafrom the United Kingdom covering the period of 1977-2018. We examinecash and in-kind benefits, and direct and indirect taxes. In addition, wehighlight an empirical implementation issue – the definition of the reference(pre-fisc) distribution. Drawing on an innovative counterfactual approach,our empirical analysis shows that trends in the redistributive effect of cashbenefits are largely associated with cyclical changes in average benefit rates.In contrast, trends in the redistributive effects of direct and indirect taxesare mostly associated with changes in progressivity. For in-kind benefits,changes in the average benefit rate and progressivity each played major rolesat different times.
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