Public Redistribution Research Articles

Tax Wedge and Skills: Case of Poland in International Perspective

Demographic change (driven by the second demographic transition) led to an uncontrolled increase in scale of various social expenditure in the OECD area, especially in continental Europe. Costs of social transfers created fiscal pressure leading to the necessity of tax increases all over Europe, including the New Member States. Employment consequences of emerging higher tax wedge has become the topic of large body of research. However, surprisingly little evidence is known on distribution of that problem across workers. Is the effect of high tax wedge equally spread or certain groups of workers suffer more than others? More specifically, are low productivity workers exposed more to the problems caused by high tax wedge?The goal of our research is to investigate empirically the latter question. The empirical hypothesis based on theoretical considerations was that high tax wedge creates especially undesirable effects for the unskilled. In other words, what is bad for the high productivity workers, is very bad for low productivity workers. If it is the case, the commonly used arguments for high public redistribution holds too much smaller extent. On the other hand, the case for progressivity in labour taxation gets stronger. Most importantly, the tax wedge is becoming the issue of urgency in countries abundant in low skilled labour.The research providing background for this paper was ambitious and modest at the same time. It was ambitious since the problem is complex and important, modest since available data is scant and therefore, the authors could not expect very robust results. Given these limitations, the eventual outcome of the research is probably better than initially anticipated. The remainder of this paper is divided into four sections. The following section presents the basic theory and existing literature. Section three discusses implications for the EU new member states. Section four investigates the problem econometrically in the cross-country perspective. Section five and six provide microeconomic evidence on wage rigidities and incentives for job search, respectively. Section seven concludes.

Minimum winning versus oversized coalitions in public finance: the role of uncertainty

This paper extends Persson et al.’s (J Polit Econ 108:1121–1161, 2000) simple legislature in the context of public finance with certainty to uncertainty. In our uncertain world, oversized coalitions (OSCs) as well as minimum winning coalitions (MWCs) may arise in equilibrium, and the agenda setter’s proposed policy may fail to receive a majority support. This is in marked contrast to the certain world, in which only MWCs can arise in equilibrium and the agenda setter’s proposal never fails to pass. When OSCs arise, we show that both public good provision and redistribution are likely to achieve their first-best solution, even if the legislature is simple.

Family, Market and Voluntary Action in the Regulation of the "Care System": A Comparison between Italy and Sweden

In this article we focus on elderly care reforms in Italy and Sweden. According to Polanyi's theory, we analyze the process of change of welfare regulation in terms of the relation between public redistribution, familial and societal reciprocity and services provided by the market. The main purpose of the analysis is to outline the processes of convergence and divergence between these two welfare systems that have pursued different paths in their historical evolution. In the first part we compare Italy and Sweden in terms of social expenditure for the elderly and the relationships between female labour market participation and supply provision. In the second part we concentrate on the institutional process of change, focusing on the main reforms that have affected the relationships between local public administration, family, third sector and private market organisations.

Solidarität durch Umverteilen oder Teilhabe am Markt? Eine Abwägung unter Berücksichtigung der katholischen Soziallehre

Die Ansicht, Menschen sollten fureinander eintreten, wird allgemein akzeptiert. Sie mundet fur viele in der Forderung, die Reichen sollten die Armen unterstutzen. Weil der privaten Hilfsbereitschaft unzureichend getraut wird, folgt daraus die verbreitete Forderung nach staatlicher Umverteilung zugunsten der Benachteiligten. Dieser Artikel begrundet, warum es im Allgemeinen hingegen besser und gerechter ist, Solidaritat dadurch zu zeigen, dass den Bedurftigen Teilhabe am Markt ermoglicht wird, als lediglich Mittel zu ihren Gunsten umzuverteilen. Die Begrundung berucksichtigt christliche Wertvorstellungen.

Public Goods, Redistribution and Rent Seeking. By GORDON TULLOCK

Public Goods, Redistribution and Rent Seeking. By GORDON TULLOCK

Fighting poverty in the US and Europe: a world of difference

As events highlight deep divisions in attitudes between America and Europe, this is a very timely study of different approaches to the problems of domestic inequality and poverty. Based on careful and systematic analysis of national data, the authors describe just how much the two continents differ in their level of State engagement in the redistribution of income. Discussing various possible economic explanations for the difference, they cover different levels of pre-tax income, openness, and social mobility; they survey politico-historical differences such as the varying physical size of nations, their electoral and legal systems, and the character of their political parties, as well as their experiences of war; and they examine sociological explanations, which include different attitudes to the poor and notions of social responsibility. Most importantly, they address attitudes to race, calculating that attitudes to race explain half the observed difference in levels of public redistribution of income. This important and provocative analysis will captivate academic and serious lay readers in economics and welfare systems.

How responsive are private transfers to income? Evidence from a laissez-faire economy

In recent years there has been burgeoning interest in how private transfers respond to household income, or “transfer derivatives”. Much of it is fueled by the specter of “crowding out”: the more responsive are private transfers, the more likely they could be supplanted by expansions in public transfers, weakening or destroying the latter's distributive impact. Yet there is also an emerging consensus that actual transfer derivatives are trivial, at least for the United States, suggesting that crowding out might loom larger in the minds of some economists than in the data. But perhaps crowding out is a fait accompli in the United States. Accordingly, we focus on the Philippines, which has a much smaller public sector. We also pursue a novel theoretical angle, which generates a sharp, non-linear relationship between private transfer receipts and income, in the form of a spline. Our empirical work applies recently developed estimation techniques that treat the spline's threshold as an unknown parameter, and they uncover transfer derivatives much larger than conventional methods reveal. Notably, private transfers patterns are consistent with altruistic preferences, effective risk sharing, or both. In accord with theoretical predictions, however, strong transfer derivatives prevail only among low-income households. Our findings suggest that attempts to aid the poor could be thwarted by private responses, which leak benefits to richer households in the form of lighter burdens of support for less fortunate kin. So the problems that operative private transfers create for public redistribution policy, first pointed out by Becker and Barro over 25-years-ago, do indeed matter empirically.

Fort TV [TV show e-mail transmission prevention

Today you're free to mail a friend a videotape of a TV show, but new digital defenses may stop you from e-mailing them. This article discusses the reasons why theses defenses are needed and some of the encryption technology involved. No solution has been proposed and vetted that affords digital content robust protection from broad public redistribution while still permitting "e-mailing to grandma" and the direct digital home copying beloved by the consumer.

Public Bad Prevention by Majority Voting on Redistribution – Experimental Evidence

This paper presents an experimental study on voting behavior in a collective body when seven persons have to decide simultaneously on public bad prevention and redistribution by means of a qualified majority. If a qualified majority for redistribution is failed, subjects suffer from a public bad. Although a voting pattern exists which maximizes both individual and group payoffs and which would guarantee a qualified majority, the public bad arises due to failure of a qualified majority in 27% (relatively costly public bad), respectively 46% (relatively cheap public bad) of all decisions. Controlling for different degrees of social distance when casting votes we find that social distance only matters when stakes are relatively low. The number of decisions per round, being endogenously determined in our treatments, systematically influences subjects' voting strategies and collective outcomes.

Financing the Market-Based Redistribution of Land to Disadvantaged Farmers and Farm Workers in South Africa: Recent Performance of the Land Reform Credit Facility

This paper compares the results of public and private land redistribution in the province of KwaZulu-Natal, South Africa. It identifies problems that constrain access to the land market, and describes recent efforts to address the liquidity problem associated with mortgage finance. The Land Reform Credit Facility (LRCF) was launched by government in May 1999 to help alleviate cash flow problems on farms purchased by disadvantaged buyers and financed with mortgage loans from commercial banks. The LRCF does not offer subsidies. Rather it offers loans with deferred or graduated repayment schedules to reputable banks and venture capital investors who finance, on similar terms, equity-share projects and land purchased by aspiring farmers. The paper outlines the LRCF experience and considers reasons for its promising start. The loan target of R15 million (US$2.15 million) set for the first year was reached after only eight months.

Complex equality - some notes on redistribution in South Africa

In this article I attempt to show that a theory o f redistribution can be derived from Walzer's political theory as presented in his Spheres o f justice. I argue that this theory shows in what areas o f South Africa’s public life redistribution is required, and what patterns of redistribution should be followed Walzer’s political theory leans heavily on the notion of shared understandings. In South Africa there are many areas of public life in which interpretations of these understandings are in conflict. I attempt to identify these areas and to show what premisses underlie the conflicting interpretations.

The private interest in public redistribution: A public choice view of the geographic distribution of federal funds

Analysis of the geographic distribution of federal funds has. heretofore been limited to the relative share of the federal pie obtained by each state (Pack, 1982; Holcombe and Zardkoohi, 1981; Crain and Tollison, 1977; Stigler, 1976; Ritt, 1976). Data aggregation problems have effectively precluded any such analysis at the congressional district level. Detailed information on federal expenditures by county and city has been collected and aggregated on a congressional district basis by the House Information Services office (HIS) for Fiscal Years 1981 and 1982.1 In this paper I undertake a Lorenztype examination of the geographic distribution of federal funds, by congressional district, for Fiscal Year 1981. A substantial inequality in the distribution is revealed: the lowest thirty percent of the districts receive a total of only about ten percent of all federal expenditures while the top ten percent of the districts garner nearly twenty-three percent. Analysis of the determinants of federal funds appropriation reveals that the richest congressional districts are getting progressively richer, and vice-versa. Political influence of the individual congressional representative is shown to be a strongly significant determining factor in the distribution of expenditures. In Section 2, the categories of information collected by HIS are discussed, and I present the plotted Lorenz curve distribution of the flow of federal funds to congressional districts. Factors that influence success in obtaining a larger share of distributed federal funds are analyzed in Section 3, on theoretical, then empirical grounds. Concluding comments with respect to public policy issues are offered in Section 4.

The public choice of differing degrees of tax progressivity

There are a number of hypotheses developed in the literature for explaining the degree of public income redistribution that can be adapted to explain the degree of progressivity that a collectivity will chose. In some cases it is difficult to obtain easily measurable and unambiguous proxies for the theoretical proposition. Nevertheless our attempts to do so prove at least somewhat encouraging.

Income Taxation, Public Sector Pricing and Redistribution

Income Taxation, Public Sector Pricing and Redistribution

Consumption-Based Private To Public Redistribution During Inflation

Neglecting the redistributive effects of a progressive income tax in an inflation, current literature in macroeconomics and public finance offers two contradictory explanations of consumption-based redistributions to the government during inflation. One explanation, the consumer illusion approach, alleges the redistribution process to be totally dependent on consumers failing to distinguish between real and money income. This approach alleges, moreover, that the monetary sector can be ignored as a constraining element in the redistribution process. The alternative, inflation tax on money analysis, sees a redistribution occurring regardless of the above illusion, the process constrained entirely by the monetary sector. Despite the rather long life of each explanation, the contradictions have never been recognized, let alone resolved, in the literature. This paper does both. We show the consumer illusion mechanism, as the literature explains it, to be subject to internal inconsistencies which are fatal. Once corrected for these critical defects, the perspective on the redistribution process which remains is shown to be identical to that of inflation tax on money analysis.