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Most analysis of the impact of taxes and benefits on households is cross-sectional, with individuals classified as rich or poor, and gains and losses calculated, using a single snapshot of data. In this report, we argue the case for taking a longer-run perspective. In particular, we show that income and circumstances over longer horizons (such as several years) are likely to form a better basis for measuring living standards. We then demonstrate how common measures of inequality and redistribution, and distributional analyses of tax and benefit reforms, are affected by taking a longer-run perspective. Results from the two perspectives may look quite different from each other and, as a result, we could end up with contrasting impressions of the extent to which the tax and benefit system redistributes from rich to poor.
Authors
Research Fellow Financial Conduct Authority
Jonathan is a Research Fellow at the IFS and a Technical Specialist in the Economics Department at the Financial Conduct Authority.
Research Fellow Trinity College Dublin
Barra is a Research Fellow at IFS and Assistant Professor of Economics at Trinity College Dublin.
Report details
- DOI
- 10.1920/re.ifs.2014.0092
- Publisher
- IFS
Suggested citation
Roantree, B and Shaw, J. (2014). The case for taking a life-cycle perspective: inequality, redistribution, and tax and benefit reforms. London: IFS. Available at: https://ifs.org.uk/publications/case-taking-life-cycle-perspective-inequality-redistribution-and-tax-and-benefit (accessed: 19 April 2024).
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