Evaluating the distributional effects of the italian fiscal policies using quantile regressions

TitleEvaluating the distributional effects of the italian fiscal policies using quantile regressions
Publication TypeWorking Paper
Year of Publication2010
AuthorsCasalone, G, Sonedda, D
Number2010_03
Keywordsin-kind transfers, income redistribution, quantile regressions, taxation
Abstract

This paper aims to evaluate the distributional impact of both income taxation and noncash income transfers in Italy, where the latter are related to health and educational services. By definition, a tax (in-kind income transfers) system is progressive (regressive) if the tax liabilities (the non cash benefits) are distributed more unequally than the income to which they apply. The econometric tool adopted in the paper is represented by quantile regression methodology which allows the evaluation of whether the investigated policies have either homogeneous or heterogeneous effects on different income quantiles. Indeed, our estimates suggest that both non cash transfers and direct taxation have heterogeneous effects on different gross income quantiles. However, although heterogeneous, the distributional effects of the potential fiscal reforms are quite small and are not able to modify the winner-loser position in the post-tax (post-benefit) income distribution of the Italian households.

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