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Redistribution across Europe

Working Paper 2021-593

Abstract

Governments face a potential trade-off between provision for the growing population in retirement and the support of working-age households with low income. Using EUROMOD-based microdata from 28 countries, we (a) quantify the redistribution to the pensioner and non-pensioner populations, (b) study the position of net beneficiaries in the overall income distribution and (c) analyse how taxes and benefits affect the working-age population with low income. Our results provide novel insights into the distributive role of tax-benefit systems across Europe. Interestingly, a strong overall redistribution between households is associated with generous pensions for a portion of the retirees but negatively related to support for low-income households.

Authors: Bernhard Hammer, Michael Christl, Silvia De Poli.

Keywords: Redistribution, Welfare state, Inequality, Microsimulation, EUROMOD
JEL: H11, H23