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Fiscal Policy, Income Redistribution, and Poverty Reduction: Evidence from Tunisia
Author(s) -
Jouini Nizar,
Lustig Nora,
Moummi Ahmed,
Shimeles Abebe
Publication year - 2018
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12372
Subject(s) - economics , poverty , subsidy , social security , redistribution (election) , fiscal policy , cash transfers , economic inequality , inequality , redistribution of income and wealth , poverty reduction , labour economics , demographic economics , development economics , monetary economics , macroeconomics , economic growth , unemployment , mathematical analysis , mathematics , politics , political science , law , market economy
This paper estimates the impact of Tunisia's tax and transfer system on inequality and poverty and assesses the benefits from public spending on education and health. Results show that Tunisia's redistributive fiscal policy reduces inequality and extreme poverty significantly. However, based on the national poverty line, the headcount ratio increases, implying that a large number of the poor people pay more in taxes than they receive in cash transfers and subsidies. This is due to a relatively high burden of personal income taxes and social security contributions for low‐income households.