A European equivalence scale for public in-kind transfers

Abstract

This paper introduces a theory-based equivalence scale for public in-kind transfers, which justifies comparison of distributions of extended income (cash income plus the value of public services) between European countries. We demonstrate the usefulness of the proposed equivalence scale in an empirical analysis of the effects of public health care, long-term care, education and childcare expenditure on estimates of income inequality and poverty for 24 European countries. The empirical results show significant effects of public in-kind transfers on the level of income inequality and poverty for all countries. Over the period 2006–2018, inequality and poverty estimates display rather different trends across European countries.

Are in-kind transfer vouchers as flexible and efficient as cash?

“…Acknowledgment of Different Needs: The paper's approach to an equivalence scale that re ects different needs for public services among various demographic groups parallels the CBE model's assumption about the e ciency of in-kind transfer vouchers in meeting speci c needs. It highlights the importance of accounting for individual and household differences in assessing economic interventions' effectiveness.The research ndings byAaberge et al (2023), lend empirical support to the CBE model's foundational assumptions about the role of in-kind transfers in reducing income inequality and addressing poverty, as well as the need for innovative measures that capture the full spectrum of individuals' economic resources and needs.…”

“…The paper "A European Equivalence Scale for Public In-kind Transfers" (Aaberge et al, 2023), provides an empirical analysis that signi cantly supports the assumptions underlying the Counterbalance Economics (CBE) model rather than detracts from them. The research by Aaberge, Langørgen, and Lindgren introduces a theory-based equivalence scale for public in-kind transfers which justi es the comparison of distributions of extended income (cash income plus the value of public services) between European countries.…”

“…Indeed, the innovative method proposed by Aaberge et al (2023) to incorporate public services into income analysis underscores the multifaceted nature of income inequality and poverty across European countries. Their ndings, which highlight the signi cant equalising effect of taxes, lend support to the notion that policy interventions, such as the implementation of voucher systems, could effectively address socioeconomic inequality by simultaneously bolstering salaries for lower-paid workers and reducing taxes on voucher income, thereby providing targeted assistance to those in need while promoting economic equity.…”

“…The research ndings fromAaberge et al (2023), further elucidate the complexity of implementing inkind transfers, particularly highlighting the observed variability in public spending across countries and the imperative to consider the diverse needs of various demographic groups. Such variability underscores the CBE model's premise that policy interventions must be designed with exibility to adapt to speci c national contexts, suggesting a potential for tailored approaches to optimise social bene ts effectively.…”

An empirical analysis of inflation's influence on income inequality in Lithuania

“…Empirical analysis of income inequality is usually based on the Lorenz curve. The Lorenz curve calculates the Gini coefficient, one of the primary measures of income inequality (Aaberge & Lindgren, 2023).…”