Income inequality and redistributive impact of government intervention accross European countries
Author: Presiyana Nenkova (University of National and World Economy, Sofia)
Keywords: income distribution, Gini coefficient, fiscal redistribution, taxes, transfers
The aim of this study is to trace income inequality changes in Europe after 1980, to identify patterns of income inequality across European countries, as well as to assess the effect of fiscal redistribution through taxes and transfers. The source of information for the analysis is the World Inequality Database and the time series that it maintains, and several indicators are used to measure income inequality - top 1% income share, top 10% income share and bottom 50% income share. The change in the values of the ratio between the average income of top 10% income share and bottom 50% income share before and after taxes and transfers serves to assess the effect of fiscal distribution, as well as the change in the values of the Gini coefficient before and after the state intervention. The results of the study show that significant differences can be found between European countries both in terms of income inequality before taxes and transfers, and in terms of subsequent government intervention through taxes and transfers and its role in mitigating and correcting growing market inequality
