State redistribution in comparative perspective: A cross-national analysis of the developed countries

The aim of this paper is to offer an overview of the many opportunities the Luxembourg Income Study (LIS) data set provides to measure the distributive effect of taxes and transfers in the developed countries. Two specific tasks are undertaken. First, and most important, the paper offers a detailed discussion of a number of aspects of fiscal redistribution, presenting a good deal of newly computed data that are, to our knowledge, unavailable elsewhere. LIS data are detailed enough to allow us not only to measure overall redistribution, but also to explore whether redistribution has been achieved primarily through taxes or transfers; to compare the redistributive effect of the most important individual transfers; to determine whether redistribution is associated with the size or the internal target efficiency of social benefits; to focus separately on redistribution across all income groups, lower, middle and upper income groups, and those in poverty; and to examine separately households headed by persons of working age. Second, the paper places fiscal redistribution in a broader context by discussing several aspects of redistribution that are not directly measured in LIS surveys. These include the redistributive effect of in-kind benefits, which we will explore using an imputation method; and second-order effects, whereby direct transfers affect pregovernment private sector income, in turn affecting measures of direct state transfers.