A presentation by Mar Delgado Téllez (Banco de España) at the Workshop on Public Finances in Riga on 21 June 2016

1. COMMENTS ON:
REDISTRIBUTION AND STABILISATION OF INCOME
PER CAPITA OF HOUSEHOLDS BY REGIONS
By José Marín Arcas
Mar Delgado
BANCO DE ESPAÑA
Riga, June 21st 2016
WORKSHOP ON PUBLIC FINANCE
The views expressed in this presentation are those of the authors and do not necessarily correspond to
the views of the Bank of Spain or the Eurosystem.

2. THIS PRESENTATION
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1. The paper in a Nutshell
2. Questions and recommendations

3. THE PAPER IN A NUTSHELL
• Estimation of a equivalent negative linear income tax:
Proportional tax on the primary income and a fix transfer for minimum guaranteed
income.
• Two main questions:
- Redistribution: how Tax, Social Benefits and transfers have an impact on the
level of inequality in a country
Analysis based in the coefficient of variation:
the smaller the less inequality there would be.
- Stabilisation: the reaction of taxes to income fluctuations.
If the relation positive= stabilising
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4. THE PAPER IN A NUTSHELL
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Stabilising effect

5. THE PAPER IN A NUTSHELL
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Redistribution Stabilisation

6. COMMENTS
• Some of the description of the country results could go to an Annex.
• The analysis is based on the regional average income. But the tax and social
benefits system are in some cases designed from a national point of view. What do
we learn from it? An increase of the tax rate would generally imply a redistribution
of wealth from the rich regions to the poor regions. But because it is an aggregate
value, we don’t know the effect intra-regions.
• As you mention, you don’t include second round effects of a change of tax
rates: primary income doesn’t depend on the tax scheme.
• You could take into account another approach not only based on the
disposable income, but on a broader welfare measure. For this analysis, the
expenditure on health and education in each region should be taken into
account.
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7. THANK YOU FOR YOU ATTENTION