Government Fiscal Policies and Redistribution in Asian Countries

Claus, Iris; Martínez-Vázquez, Jorge; Vulovic, Violeta

doi:10.2139/ssrn.2186172

Cited by 41 publications

(39 citation statements)

References 76 publications

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“…There is much evidence to suggest that at least some types of government spending have tended to lower income inequality in many countries and regions of the world (e.g. Goni et al ., ; Lustig, , ; Lustig et al ., ; Martinez Vazquez et al ., ). However, it is also recognized that the relationship between government spending and inequality is complex, and many doubts have been raised about the effectiveness of government spending as a redistributive policy instrument, particularly in LICs and MICs.…”

Section: Literature Reviewmentioning

confidence: 97%

“…However, other recent studies have found evidence that certain types of government spending, for example, on social welfare, education and health, do have a negative and statistically significant effect on income inequality (e.g. Claus et al ., ; Martinez Vazquez et al ., ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…It is often argued that the redistributive effect of taxation in developing countries has been limited, due for example to greater reliance on indirect taxes and widespread evasion of direct taxes (e.g. Tanzi, ; Chu et al ., ; Bird and Zolt, ; Goni et al ., ; Claus et al ., ; Mahon, ). However, there is evidence that higher inflation raises income inequality (e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Does Government Spending Affect Income Inequality? A Meta‐regression Analysis

Anderson

d’Orey

Duvendack

et al. 2016

Journal of Economic Surveys

109

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In this paper findings of a meta-regression analysis are presented exploring the effects of government spending on income inequality, with a particular focus on low-and middle-income countries. We identify a total of 84 separate studies containing over 900 estimates of the effect of one or more measures of spending on one or more measures of income inequality. The results show some evidence of a moderate negative relationship between government spending and income inequality, which is strongest for social welfare and other social spending, and when using the Gini coefficient or the top income share as the measure of inequality. However, both the size and direction of the estimated relationship between government spending and income inequality is affected by a range of other factors, including the control variables and estimation method used. We also find evidence of publication bias, in that negative estimates of the relationship appear to be under-reported in the literature.

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Section: Literature Reviewmentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Does Government Spending Affect Income Inequality? A Meta‐regression Analysis

Anderson

d’Orey

Duvendack

et al. 2016

Journal of Economic Surveys

109

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show abstract

“…Unequivocally, policy on the allocation of expenditure is one of the important instruments 2 through which the government can achieve economic growth, which is crucial for increasing employment, mitigating poverty, and narrowing regional income gaps. Besides, public spending on education and health enhances human capacity and enables people to participate in higher living standards (Claus et al 2014).…”

Section: Introductionmentioning

confidence: 99%

“…The inequalities in agricultural income can also be explained by weak initial conditions, unfavorable climate and production conditions, market failure, and hence persistent gaps in economic and social amenities (Betz & Neff 2016;Dev 2017). 2 Other instruments are taxation and direct income transfers that redistribute income from higher to lower income groups, governance and institutional reforms to level the playing field (Claus et al 2014). 3 Note that expenditures on agricultural R&D is expanded to include those related to soil conservation, crops and animal husbandry; expenditures on transport are included with expenditures on roads; and expenditures on medical and public health are broadly defined to include those related to social welfare and nutrition.…”

Section: Introductionmentioning

confidence: 99%

Regional income inequalities and public investments in rural India

Bathla¹,

Kumar²,

Joshi³

2018

Agri. Econ. Rese. Revi.

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Regional inequalities in income levels in the agricultural sector have increased over time, but not as sharply as in the non-agricultural sectors. This article examines the effect of public investments on agricultural income inequalities across 17 major Indian states for the period 1981/82 to 2013/14 and for the pre-and post-liberalisation periods. The impact of conventional inputs and various types of public investments on income inequality is found to be significant but spending on education and health have larger adverse effects compared with spending on roads, energy, and irrigation over time. Land, labour, and private investment in irrigation also have only a modest impact. Among various categories of public investments contributing to regional income inequality, the contribution of education is estimated to be 32.2% nationally, and 50.8%, 38.5%, and 29.7%, respectively, in the low, middle, and high per capita income states. Results suggest that public investments should target roads, energy, irrigation, and agricultural research and development in the less-developed, more agriculture-dependent states to improve regional income equality, increase agricultural productivity, and alleviate rural poverty. The marginal returns to each of these investments, in terms of reducing income inequality, are generally higher in the low-income, agriculture-dominant states, implying the potential benefit of a location-specific expenditure policy.

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Nonlinear analysis of government expenditure and tax rate on income inequality in India

Padhan

Haouas

Hammoudeh

et al. 2020

Journal of Public Affairs

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Using annual data for India, we examine the impact of taxation and government expenditure on income inequality by endogenizing GDP, urbanization, economic globalization, remittances inflows and net FDI flows. For the empirical analysis, we use the nonlinear autoregressive distributed lag model, which indicates a long‐run interplay between government expenditure and taxation on income inequality. Further, the results show that a rise in taxation increases the income inequality, while government expenditure reduces the income inequality in the long‐run. Contrastingly, the findings reveal that GDP, urbanization and economic globalization worsen and remittance inflows and net FDI flows exacerbate income inequality. Therefore, the study suggests that the active policy makers in India can curb rising income inequality by looking at both government expenditure and the sources of taxation before framing any policies related to income distribution. Our results also underscore the close interlinkages between development strategies pursued by India and the wealth gap, which have facilitated the redistribution of gains among those already enjoying high income levels.

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Government Fiscal Policies and Redistribution in Asian Countries

Cited by 41 publications

References 76 publications

Does Government Spending Affect Income Inequality? A Meta‐regression Analysis

Does Government Spending Affect Income Inequality? A Meta‐regression Analysis

Regional income inequalities and public investments in rural India

Nonlinear analysis of government expenditure and tax rate on income inequality in India

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