Noncash Benefits and Income Distribution

This report gives the results derived from a cross-sectional analysis of the distributional effects of noncash benefits in four countries. The results of the Norwegian data suggest that the distribution of benefits influences the relative income position of household groups. The main beneficiaries of the free education system in Norway are, not surprisingly, households with children. Noncash health benefits particularly improve the situation of the elderly. When the income measures are adjusted for household size and composition, the spread in relative mean income across the different groups is reduced. To measure the impact of income inequality the authors use income per decile group before and after the inclusion of in-kind benefits. Looking at the population as a whole, it is found that households in the bottom of the distribution receive more than those at the top. Disaggregating the population by household types, the authors find that for certain types, mainly families with children, cash income is correlated with noncash income.