Learning from the 'Best': The Impact of Tax-Benefit Systems in Africa

33 Pages Posted: 23 Jan 2019

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Holguer Xavier Jara Tamayo

University of Essex

Prudence Kwenda

University College Dublin (UCD)

Miracle Ntuli

University of Cape Town (UCT)

Abstract

Redistributive systems in Africa are still in their infancy but are constantly expanding in order to finance increasing public spending. This paper aims at characterizing the redistributive potential of six African countries: Ghana, Zambia, Mozambique, Tanzania, Ethiopia and South Africa. These countries show contrasted situations in terms of income distribution. We assess the role of tax-benefit systems to explain these differences. Using newly developed tax-benefit microsimulations for all six countries, we produce counterfactual simulations whereby the system of the most (least) redistributive country is applied to the population of all other countries.In this way, we can decompose the total country difference in income distribution between the contribution of tax-benefit policies versus the contribution of other factors (market income distributions, demographics, etc.). This analysis contributes to the recent literature on the redistributive role of socio-fiscal policies in developing countries and highlights the role of microsimulation techniques to characterize how different African countries can learn from each other to improve social protection and reduce inequality.

Keywords: tax-benefit policy, microsimulation, inequality, poverty, Africa

JEL Classification: H23, H53, I32

Suggested Citation

Bargain, Olivier and Jara Tamayo, Holguer Xavier and Kwenda, Prudence and Ntuli, Miracle, Learning from the 'Best': The Impact of Tax-Benefit Systems in Africa. IZA Discussion Paper No. 12017, Available at SSRN: https://ssrn.com/abstract=3318775

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

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

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland
+353 1 716 8357 (Phone)
+353 1 283 0068 (Fax)

HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Holguer Xavier Jara Tamayo

University of Essex

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Prudence Kwenda

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland

Miracle Ntuli

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

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