Redistribution in the Age of Austerity: Evidence from Europe 2006-2014

Publication Date

8-19-2016

Document Type

Article

Organizational Units

College of Arts Humanities and Social Sciences, Economics

Keywords

Inequality, Austerity, Europe, Fiscal policy, Lorenz curve

Abstract

We examine the relationship between changes in a country’s public sector fiscal position on inequality at the top and bottom of the income distribution during the age of austerity from 2006 to 2013. We use a parametric Lorenz curve model and Gini-like indices of inequality as our measures to assess distributional changes. Based on Statistics of Income and Living Conditions (EU-SILC) and IMF data for 12 European countries, we find that more severe adjustments to the cyclically adjusted primary balance (i.e., more austerity) are associated with a more unequal distribution of income driven by rising inequality at the top. The data also weakly suggests a decrease in inequality at the bottom. The distributional impact of austerity measures reflects the reliance on regressive policies and likely produces increased incentives for rent-seeking while reducing incentives for workers to increase productivity.

Copyright Date

8-19-2016

Copyright Statement / License for Reuse

All Rights Reserved
All Rights Reserved.

Rights Holder

Informa UK Limited, trading as Taylor & Francis Group

Provenance

Received from author

Language

English (eng)

Extent

5 pgs

Publication Statement

Copyright held by Informa UK Limited, trading as Taylor & Francis Group. User is responsible for all copyright compliance.

Publication Title

Applied Economics Letters

Volume

24

First Page

672

Last Page

676

ISSN

1466-4291

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