Socially Improving Tax Reforms

CIRPEE Working Paper No. 04-01

48 Pages Posted: 16 Feb 2004

See all articles by Jean-Yves Duclos

Jean-Yves Duclos

Laval University; IZA Institute of Labor Economics

Paul Makdissi

Université de Sherbrooke - Department of Economics

Quentin T. Wodon

World Bank

Date Written: January 2004

Abstract

This paper proposes graphical methods to determine whether commodity tax changes are socially improving, in the sense of improving social welfare or decreasing poverty for large classes of social welfare and poverty indices. It also derives estimators of critical poverty lines and economic efficiency ratios which can be used to characterize socially improving tax reforms. The statistical properties of the various estimators are derived in order to make the method implementable using survey data. The methodology is illustrated using a recently proposed reform of the Mexican Valued Added Tax system.

Keywords: Social Welfare, Poverty, Efficiency, Tax Reform, Stochastic Dominance

JEL Classification: D12, D63, H21, I32

Suggested Citation

Duclos, Jean-Yves and Makdissi, Paul and Wodon, Quentin T., Socially Improving Tax Reforms (January 2004). CIRPEE Working Paper No. 04-01, Available at SSRN: https://ssrn.com/abstract=501906 or http://dx.doi.org/10.2139/ssrn.501906

Jean-Yves Duclos (Contact Author)

Laval University ( email )

Quebec G1K 7P4
Canada
418-656-7096 (Phone)
418-656-9727 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Paul Makdissi

Université de Sherbrooke - Department of Economics ( email )

2500, Boulevard of the University
Sherbrooke J1K 2R1, Quebec
Canada

Quentin T. Wodon

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States
202-473-1446 (Phone)
202-522-0054 (Fax)

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