The Paradox of Redistribution Revisited: And that it May Rest in Peace?

51 Pages Posted: 8 Jun 2013

See all articles by Ive Marx

Ive Marx

University of Antwerp; IZA Institute of Labor Economics

Lina Salanauskaite

University of Antwerp

Gerlinde Verbist

University of Antwerp

Abstract

There is a long-standing controversy over the question of whether targeting social transfers towards the bottom part of the income distribution actually enhances or weakens their redistributive impact. Korpi and Palme have influentially claimed that "the more we target benefits at the poor, the less likely we are to reduce poverty and inequality". The basic empirical underpinning of this claim is a strong inverse relationship at the country level between social transfer targeting and redistributive impact. We show that this no longer holds as a robust empirical generalisation. The relationship between the extent of targeting and redistributive impact over a broad set of empirical specifications, country selections and data sources has in fact become a very weak one. For what it matters, targeting tends to be associated with higher levels of redistribution, especially when overall effort in terms of spending is high. We try to make substantive sense of this breakdown of the originally established relationship by focusing on two questions: first, what has changed in the countries originally included in the study and, second, what is different about the countries now additionally included in the analysis?

Keywords: targeting, tax benefit policies, redistribution, inequality

JEL Classification: H1, H2, H53

Suggested Citation

Marx, Ive and Salanauskaite, Lina and Verbist, Gerlinde, The Paradox of Redistribution Revisited: And that it May Rest in Peace?. IZA Discussion Paper No. 7414, Available at SSRN: https://ssrn.com/abstract=2276306

Ive Marx (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

IZA Institute of Labor Economics ( email )

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

Lina Salanauskaite

University of Antwerp

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

Gerlinde Verbist

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
224
Abstract Views
1,169
rank
164,157
PlumX Metrics