Working Paper: CEPR ID: DP1117
Authors: Sarah Jarvis; Stephen Pudney
Abstract: This study examines the scope for redistributive government policies based on progressive income taxation and direct income transfers. We concentrate on the case of Hungary. We first survey recent developments in the economic circumstances of the household sector and changes in the Hungarian tax-benefit system. We then examine the changing redistributive role of the personal income tax system. Finally, we consider the redistributive potential for various types of income transfer, using optimal targeting techniques. The analysis is based on data from the 1991 Hungarian Household Budget Survey.
Keywords: Hungary; Economic Transition; Redistribution
JEL Codes: 031; J31; P24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Progressive personal income tax (PIT) reforms (H29) | Increased tax burden on lower-income households (H22) |
| Decreased progressivity of PIT (H29) | Shift in redistributive capacity of the tax system (H23) |
| Benefit system (H55) | Poverty alleviation (I32) |
| Reallocating benefits from families with children to pensioners and unemployed workers (H55) | Minimized poverty (I32) |