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This paper produces a comprehensive assessment of income redistribution to the working-age population, covering OECD countries over the last two decades. Redistribution is quantified as the relative reduction in market income inequality achieved by personal income taxes (PIT), employees’ social security contributions, and cash transfers, based on household-level micro-data. A detailed decomposition analysis uncovers the respective roles of size, tax progressivity, and transfer targeting for overall redistribution, the respective role of various categories of transfers for transfer redistribution; as well as redistribution for various income groups. The paper shows a widespread decline in redistribution across the OECD, both on average and in the majority of countries for which data going back to the mid-1990s are available. This was primarily associated with a decline in cash transfer redistribution while PIT played a less important and more heterogeneous role across countries. In turn, the decline in the redistributive effect of cash transfers reflected a decline in their size and in particular by less redistributive insurance transfers. In some countries, this was mitigated by more redistributive assistance transfers but the resulting increase in the targeting of total transfers was not sufficient to prevent transfer redistribution from declining.

A transfer from a richer individual to a poorer one seems to be the most intuitive and straightforward way of reducing income inequality in a society. However, can such a transfer reduce the welfare of the society? We show that a rich-to-poor transfer can induce a response in the individuals’ behaviors which actually exacerbates, rather than reduces, income inequality as measured by the Gini index. We use this result as an input in assessing the social welfare consequence of the transfer. Measuring social welfare by Sen’s social welfare function, we show that the transfer reduces social welfare. These two results are possible even for individuals whose utility functions are relatively simple (namely, at most quadratic in all terms) and incorporate a distaste for low relative income. We first present the two results for a population of two individuals. We subsequently provide several generalizations. We show that our argument holds for a population of any size, and that the choice of utility functions which trigger this response is not singular – the results obtain for an open set of the space of admissible utility functions. In addition, we show that a rich-to-poor transfer can exacerbate inequality when we employ Lorenz-domination, and that it can decrease social welfare when we draw on any increasing, Schur-concave welfare function.

The purpose of this paper is to examine the cross‐sectional relation between the value of cross‐border intrafirm transfers (CITs) and three dependent variables: return on investment (ROI), the US effective tax rate (ETRUS), and the global effective tax rate (ETRGL) to assess the existence or nonexistence of cross‐jurisdictional income shifting.

Regression analysis is used to test the relationship between CIT and accounting performance and effective tax rates.

The results indicate that ROI and ETRUS increase whereas ETRGL decreases with the extent of CITs after we control for variables that impact earnings and taxes (e.g. size, industry classification, internationalization, tax shelter, and growth). This suggests that firms earn income, on average, in jurisdictions with tax rates greater than the USA, such that diverting income from overseas to the USA is a tax‐saving action. The tax results are consistent with Jacob and Mills and Newberry's findings that firms shifted income into the USA. The results also reveal that companies that engage in CITs are those that are large, relatively more profitable, and pay more US taxes.

This study does not differentiate between transfer pricing schemes for tax minimization reasons from those done for earnings management purposes, which should be addressed by future research.

Results have public policy implications as an understanding of how CITs affect accounting performance and taxes is important for the craft of tax policy and transfer price regulation.

This study furthers our understanding of the impact of CITs on earnings and taxes, an important component of accounting research which has not been properly addressed by prior studies.

Using decomposable measures of inequality, the implications of household structure are investigated by examining inequality between and within household groups based on the number of exemptions, which correlates with household size, and the filing status, which correlates with the common forms of household structure, i.e. married, single, head of household. Detailed household income data are used to measure income inequality for both pre-tax/transfer and post-tax/transfer definitions of income. These decompositions provide information about the degree of inequality, both before and after taxes and transfers, which is due to household size and filing status. The bootstrap is employed to construct standard errors for the inequality measures and their decompositions, and hypothesis tests are conducted to determine whether the observed changes in the distribution of income are statistically significant.

The last 60 years have seen Australia and the United Kingdom diverge, both socially and economically. This paper considers how the widening social gap between the two countries is reflected by their respective redistributive systems. The analysis is based upon two microsimulation procedures – one static and the other dynamic – both of which are used to consider the probable distributional effects that would arise if elements of the Australian and UK tax and benefits systems were exchanged. The static microsimulation analysis presented suggests that comparisons based purely upon cross-sectional survey data are affected by population heterogeneity, which tend to overstate the redistributive effect of the Australian transfer system relative to the UK. Nevertheless, the dynamic microsimulations suggest that, on balance, the Australian transfer system is more redistributive than the UK system, and reflects a greater concern for redistribution between households. The UK system, in contrast, reflects a greater concern for redistribution through the life course.

European countries have the world’s most redistributive tax and transfer systems. While they have been well equipped to deal with vertical inequality – fostering redistribution from the rich to the poor – less is known about their performance in dealing with horizontal inequality, that is, in redistributing across socioeconomic groups. In a context where individuals may not only care about vertical redistribution, but also about the economic situation of the specific groups they belong to, the horizontal dimension of redistribution becomes politically salient and can be a source of social tensions. The authors analyse the performance of the 28 EU countries for redistribution across (i) age groups; (ii) occupational groups; and (iii) household types over the period 2007–2014 using counterfactual simulation techniques. We find a significant degree of heterogeneity across countries: changes in the tax and transfer system have particularly hit the young and the losers of occupational change in Eastern European countries, while households with greater economic security have benefited from these changes. The findings of this study suggest that horizontal inequality is a dimension which policy-makers should take into account when reforming tax and transfer systems.

Poverty dynamics and the ability of the Italian welfare system to reduce poverty are investigated by using the 1991‐1995 panel of the Bank of Italy’s Survey of Household Income and Wealth. Households most exposed to poverty live in the South, have a larger size, a young or female head, with a low educational level or a discontinuous work profile. The dynamic and static effectiveness (in terms of poverty reduction) of social transfers is analysed, as well as the factors affecting exclusion from the safety net. A closer look is taken at the effects of a minimum income guarantee in the experimental phase in Italy.

European Union (EU) member states are dedicated to a set of sustainable development goals, among them to: (1) promote well-being for all at all the ages and (2) achieve gender equality. This chapter uses the National Transfer Accounts (NTA) methodology that enables comprehensive measurement of intergenerational transfers, both public and private, and differences in the gender equality promotion among the countries. Our analysis is based on the fully comparable NTA results for 25 EU countries from 2010. The authors perform cluster analysis based on five indicators, measuring the importance of different types of age reallocations and the differences in gender equality promotion among the EU countries. Since the economic life cycle (showing the level of dependency) and its financing strongly depend on country-specific institutional and cultural settings, the authors link their results with the typical welfare regimes’ typology. The authors end up with three different groups of countries showing a clear north–south division of countries.

The paper examines the effect of family transfers on child poverty in Greece, Italy, Spain and Portugal. Family transfers are defined as to include non-contributory child benefits, contributory family allowances and tax credits or allowances. The drive to reduce child poverty is of particular interest in southern Europe, where public support to poor families with children is often meagre or not available at all. The paper uses the European cross-country microsimulation model, EUROMOD, to assess the distributional impact of existing family transfers and to explore the scope for policy reforms, before it concludes with a discussion of key findings and policy implications.