Inequality, poverty and the composition of redistribution

Article


Costas-Fernandez, J. and Lodato, S. 2022. Inequality, poverty and the composition of redistribution. Social Choice and Welfare. 59 (4), pp. 925-967. https://doi.org/10.1007/s00355-022-01415-5
TypeArticle
TitleInequality, poverty and the composition of redistribution
AuthorsCostas-Fernandez, J. and Lodato, S.
Abstract

We study the use of social expenditures and regulation for redistribution. When regulated goods are essential in the consumption bundle of the poor, a high poverty rate creates incentives to increase redistribution through regulation. By contrast, inequality directs redistribution towards social expenditures. We propose a theoretical model that captures the trade-off between these two redistributive policies and test the model implications with a novel municipality dataset on income and local government policies. Theory predicts and empirical evidence supports that failing to account for poverty biases the effect of inequality on redistribution. Our evidence also reflects the positive connection between poverty and the use of regulation for redistribution.

LanguageEnglish
PublisherSpringer
JournalSocial Choice and Welfare
ISSN0176-1714
Electronic1432-217X
Publication dates
Online17 Jun 2022
Print30 Nov 2022
Publication process dates
Deposited25 May 2022
Submitted29 Apr 2021
Accepted16 May 2022
Output statusPublished
Publisher's version
License
Accepted author manuscript
File Access Level
Restricted
Copyright Statement

© The Author(s) 2022
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/

Additional information

We have created R code to pre-process the data and Stata code for the main analysis. These will be provided by the authors.

Digital Object Identifier (DOI)https://doi.org/10.1007/s00355-022-01415-5
Web of Science identifierWOS:000812472100001
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