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ITD Global Conference - Tax and Inequality
Social Cohesion in a Shifting World - Launch




Intergenerational Aspects
of Inequality

Mario Pezzini
OECD Development Centre


New Dehli, India, 7-9 December 2011
International Tax Dialogue and Ministry of
     Finance, Government of India
The aspirations of the emerging middle class
     Billion                        OECD countries    non-OECD economies
       6


       5


       4


       3                                                                   80%


                                                                  68%
       2
                                            46%      50%
                    30%
       1
                    70%                     54%      50%          32%      20%

       0
                  2000                      2010     2012        2020      2030


Source: PGD 2012 , based on Kharas (2010)
Social mobility: correlation of parent/child education




Source: OECD (2010) based on Hertz et al. (2007)
Duality and the emerging middle class (Brazil)
The ‘missing middle’ in social protection coverage: informal middle class workers
                       Population by income quintile and labour status (2006)
            100%
              90%
              80%
              70%
              60%
              50%
              40%
              30%
              20%
              10%
                0%
                                 1         2              3            4            5

                     Out of labour force       Unemployed              Informal employee
                     Self-employed             Skilled self-employed   Formal employee

     Source: da Costa et al (2011).
Policies can make a difference for inequality
Gini coefficients before and after taxes and transfers in developing countries
                             Inequality before taxes and transfers          Inequality after taxes and transfers
   60

   50

   40

   30

   20
   10

     0




                                                                                      Mexico
                                      Brazil




                                                                                                                   OECD-24 avg.
                                                                                                    Peru
                                                    Chile
                 Argentina




                                                                 Colombia




  Source: OECD (2008a and 2008b).
Burundi
                                                                  Guinea-Bissau
                                                                Congo Dem. Rep.
                                                                    Sierra Leone
                                                                         Ethiopia
                                                                            Niger
                                                                 Central Afr. Rep.
                                                                        Malawi*
                                                                          Liberia
                                                                    Madagascar
                                                                         Rwanda
                                                                   Mozambique
                                                                         Uganda
                                                                          Guinea
                                                                        Tanzania
                                                                    Burkina Faso
                                                                             Togo
                                                                         Gambia
                                                                              Mali
                                                                     Comoros**
                                                                        Ghana**
                                                                                                   ODA per capita




                                                                            Benin
                                                               AFRICAN MEDIAN
                                                            São Tomé & Principe
                                                                    Côte d'Ivoire
                                                                     Mauritania
                                                                                                                    Tax revenue per capita




                                                                           Kenya




Source: OECD/AfDB/UNECA (2010), African Economic Outlook.
                                                                      Cameroon
                                                                         Senegal
                                                                          Zambia
                                                                         Djibouti
                                                                             Chad
                                                                           Sudan
                                                                         Lesotho
                                                                            Egypt
                                                                          Nigeria
                                                              AFRICAN AVERAGE
                                                                        Morocco
                                                                                                                                                    Resources for development in Africa




                                                                     Cape Verde
                                                                          Tunisia
                                                                       Swaziland
                                                                         Namibia
                                                                       Mauritius
                                                                           Congo
                                                                    South Africa
                                                                       Botswana
                                                                          Angola
                                                                          Algeria
                                                                           Gabon
                                                                      Seychelles
                                                               Equatorial Guinea
                                                                            Libya
                                                                                 0
                                                                                     400
                                                                                           800
                                                                                                 1200
                                                                                                                         1600
                                                                                                                                             2000




                                                                                           USD
With higher trust, tax evasion is less acceptable…

                                   0.5
                                   0.4
                                   0.3
Tax evasion is never justifiable




                                   0.2
  (fraction of respondents)




                                   0.1
                                   0.0
                                   -0.1
                                   -0.2
                                   -0.3
                                   -0.4
                                   -0.5
                                          -0.3   -0.2    -0.1             0.1            0.2   0.3
                                                        Interpersonnal trust indicator

     Source: PGD 2012.
ITD Global Conference - Tax and Inequality
Social Cohesion in a Shifting World - Launch




The floor is yours




New Dehli, India, 7-9 December 2011
International Tax Dialogue and Ministry of
     Finance, Government of India

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Intergenerational aspects of inequality

  • 1. ITD Global Conference - Tax and Inequality Social Cohesion in a Shifting World - Launch Intergenerational Aspects of Inequality Mario Pezzini OECD Development Centre New Dehli, India, 7-9 December 2011 International Tax Dialogue and Ministry of Finance, Government of India
  • 2. The aspirations of the emerging middle class Billion OECD countries non-OECD economies 6 5 4 3 80% 68% 2 46% 50% 30% 1 70% 54% 50% 32% 20% 0 2000 2010 2012 2020 2030 Source: PGD 2012 , based on Kharas (2010)
  • 3. Social mobility: correlation of parent/child education Source: OECD (2010) based on Hertz et al. (2007)
  • 4. Duality and the emerging middle class (Brazil) The ‘missing middle’ in social protection coverage: informal middle class workers Population by income quintile and labour status (2006) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 2 3 4 5 Out of labour force Unemployed Informal employee Self-employed Skilled self-employed Formal employee Source: da Costa et al (2011).
  • 5. Policies can make a difference for inequality Gini coefficients before and after taxes and transfers in developing countries Inequality before taxes and transfers Inequality after taxes and transfers 60 50 40 30 20 10 0 Mexico Brazil OECD-24 avg. Peru Chile Argentina Colombia Source: OECD (2008a and 2008b).
  • 6. Burundi Guinea-Bissau Congo Dem. Rep. Sierra Leone Ethiopia Niger Central Afr. Rep. Malawi* Liberia Madagascar Rwanda Mozambique Uganda Guinea Tanzania Burkina Faso Togo Gambia Mali Comoros** Ghana** ODA per capita Benin AFRICAN MEDIAN São Tomé & Principe Côte d'Ivoire Mauritania Tax revenue per capita Kenya Source: OECD/AfDB/UNECA (2010), African Economic Outlook. Cameroon Senegal Zambia Djibouti Chad Sudan Lesotho Egypt Nigeria AFRICAN AVERAGE Morocco Resources for development in Africa Cape Verde Tunisia Swaziland Namibia Mauritius Congo South Africa Botswana Angola Algeria Gabon Seychelles Equatorial Guinea Libya 0 400 800 1200 1600 2000 USD
  • 7. With higher trust, tax evasion is less acceptable… 0.5 0.4 0.3 Tax evasion is never justifiable 0.2 (fraction of respondents) 0.1 0.0 -0.1 -0.2 -0.3 -0.4 -0.5 -0.3 -0.2 -0.1 0.1 0.2 0.3 Interpersonnal trust indicator Source: PGD 2012.
  • 8. ITD Global Conference - Tax and Inequality Social Cohesion in a Shifting World - Launch The floor is yours New Dehli, India, 7-9 December 2011 International Tax Dialogue and Ministry of Finance, Government of India