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Skewness, tax progression, and demand for redistribution : evidence from the UK
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Pogorelskiy, Kirill and Traub, Stefan (2017) Skewness, tax progression, and demand for redistribution : evidence from the UK. Discussion Paper. Coventry: University of Warwick. Department of Economics. CRETA Discussion Paper Series (29). (Unpublished)
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
We introduce a skewness-based approach to measure tax progression and demand for redistribution. Adapting a novel, quantilebased statistical measure of skewness to right-skewed income distributions, we uncover its political economy foundation, by simultaneously relating the same measure to the classical model of income redistribution due to Meltzer and Richard (1981), to the Prospect Of Upward Mobility (POUM) mechanism due to B`enabou and Ok (2001), and to the progressivity of a tax schedule. In an empirical analysis of UK income distributions in 1979 – 2013, we find that skewness has increased over time, with the rich moving further away from the median. While the magnitude of the increase has remained small enough so that observed redistribution (or lack thereof ) could be consistent with POUM hypothesis, more recent periods show an increase in tax progression.
Item Type: | Working or Discussion Paper (Discussion Paper) | ||||||
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Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HJ Public Finance |
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Divisions: | Faculty of Social Sciences > Economics | ||||||
Library of Congress Subject Headings (LCSH): | Taxation -- Mathematical models -- Great Britain, Income distribution -- Mathematical models -- Great Britain | ||||||
Series Name: | CRETA Discussion Paper Series | ||||||
Publisher: | University of Warwick. Department of Economics | ||||||
Place of Publication: | Coventry | ||||||
Official Date: | April 2017 | ||||||
Dates: |
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Number: | 29 | ||||||
Number of Pages: | 53 | ||||||
Institution: | University of Warwick | ||||||
Status: | Not Peer Reviewed | ||||||
Publication Status: | Unpublished | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 5 January 2017 | ||||||
Date of first compliant Open Access: | 6 January 2017 | ||||||
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