Fiscal Policy And Social Welfare

Fiscal policy is a key tool for achieving distributional objectives in advanced economies. This paper embeds the discussion of fiscal redistribution within the standard social welfare framework, which lends itself to a transparent and practical evaluation of the extent and determinants of fiscal redistribution. Differences in fiscal redistribution are decomposed into differences in the magnitude of transfers (fiscal effort) and in the progressivity of transfers (fiscal progressivity). Fiscal progressivity is further decomposed into differences in the distribution of transfers across income groups (targeting performance) and in the social welfare returns to targeting due to varying initial levels of income inequality (targeting returns). This decomposition provides a clear distinction between the concepts of progressivity and targeting, and clarifies the relationship between them. For illustrative purposes, the framework is applied to data for 28 EU countries to determine the factors explaining differences in their fiscal redistribution and to discuss patterns in fiscal redistribution highlighted in the literature.

Fiscal policy is an important instrument for maintaining and improving living standards. Such living standards can be viewed as an outcome of the interaction between the opportunities offered by society and the readiness and ability of each person to exploit them. Under certain circumstances, public finance can make an important contribution to the creation of opportunities within a given society by raising resources from the private sector through taxation or borrowing (domestic and external) and allocating those resources effectively and equitably in the form of public spending, including through public goods and transfers. The first chapters in this volume sketch out a framework that policy makers can use in adopting a more cohesive or integrated approach to the short- and long-term dimensions of fiscal policy. Here the traditional threefold rationale for fiscal policy proposed by Musgrave-stabilization, resource allocation, and distribution-continues to be useful. Other chapters in this volume take up some of the critical institutional challenges in implementing fiscal policy for longer-term growth and development. These chapters also look at the tools and approaches being developed to address these challenges. Improving the quality of public investment management is a particular priority in view of the recent evidence that as little as half of all public investment expenditure translates into productive capital stock. The last chapter in this volume is a case study of fiscal responses to the great recession in low-income Sub-Saharan Africa, looking at stabilization and the longer-run growth, as well as distributional aspects of such responses. The growing depth of domestic financial markets in many African countries rather unexpectedly is turning out to be a critical source of financing for fiscal policy responses.

A systematic treatment of tax and transfer systems models and their redistributive effects, illustrating fixed pre-tax income distributions, fixed wage rate distributions, and the general equilibrium framework. Creedy (economics, U. of Melbourne) reviews various inequality and tax progressivity schemes, as well as social welfare functions and pension measures, demonstrating a continuum that moves from a framework with fixed labor supplies to one in which labor supplies respond to the changes in the tax system. Includes extensive numerical examples and diagrams. Annotation copyright by Book News, Inc., Portland, OR

In a competitive two-country overlapping generations model with perfect capital mobility, a plan that is individually Pareto optimal (that is Pareto optimal with respect to individual preferences) can be sustained without coordination of national fiscal policies when the fiscal arsenal is restricted to lump-sum taxes and government borrowing. Cooperation is required to achieve a Pareto optimum with respect to the two utilitarian national social welfare functions. Cooperation and international side payments are required to achieve an optimum with respect to a utilitarian global social welfare function. Without international lump-sum transfers, when distortionary taxes on capital income are permitted, Pareto optima with respect to national social welfare functions and global social welfare optima will not be individual Pareto optima: efficiency is traded off for a more desirable intergenerational and international distribution of resources. With nationally provided international public goods, the achievement of individual Pareto efficiency requires coordination of public spending but not of financing.

The effects of fiscal policy measures, both taxes and public spending, adopted by developing countries in response to the 2009 global crisis are still uncertain. This book discusses them using an analytical framework that allows for distilling possible implications on growth and social welfare.

The essays in this volume, first published in 2001, examine fiscal policy-making and providing for social welfare in post-socialist countries.

Continuities and Discontinuities assesses the making of Canadian social and labour market policy in the context of two factors—globalization and neoconservatism. Specialists from a variety of fields and disciplines examine the relation between Canada's changing political economy and its social welfare and labour market policy. These essays analysing continuities and discontinuities in policy emerged from research that initially was presented at the 5th Conference on Social Welfare Policy held at Bishop's University in 1991, and that since then has been revised to reflect the situation of the mid-1990s. Part I introduces the three broad areas explored in the volume. Part II addresses new trends in Canadian political economy and their relation to public policy. Part III analyses social welfare policy. Of the essays included, several investigate the democratizing of the Canadian welfare state and controversies in the conception and definition of poverty. Others address the AIDS crisis, health policy, and social policy issues that primarily affect women, children, and native peoples. In Part IV recent Canadian labour market policies are investigated and appraised, and alternatives suggested or evaluated. One essay argues that employment security and high wages could generate high productivity and international competitiveness; another examines the impact of the growth in part-time employment on the welfare state; a third probes the relation of organized labour to a guaranteed annual income; others investigate the impact of neoconservatism on labour market policy-making in various provinces and regions. Globalization and neoconservatism continue to shape change and require constant evaluation. These thought-provoking and informative essays are an important contribution to the ongoing debate on social welfare and labour market policy in Canada.

This book explores the role that coercion plays in the establishment and evolution of the public economy.