This paper is a review of the post-war literature on income distribution and development. It argues that the literature has cycled from one consensus to another, responding to emerging policy issues and new analysis. On the basis of the review, the paper identifies five areas that will command the attention of analysts in the coming two decades: (i) country case studies rather than cross-country regression analysis; (ii) the phenomenon of increasing inequality; (iii) different levels of disaggregation, particularly distribution between broadly defined groups; (iv) intra-household allocation; and (v) alternative modes of redistribution in face of inequality increasing tendencies.

Income Distribution and Development

I provide new evidence on the incidence of payroll taxation by examining the experience of Chile before and after the privatization of its Social Security system. This policy change led to a sharp exogenous reduction in the payroll tax burden on Chilean firms; on average, payroll tax rates fell by 25% over 6 years. Using data from a census of manufacturing firms, I estimate that the incidence of payroll taxation is fully on wages, with no effect on employment. This finding is robust to a variety of empirical approaches to the problem of measurement error in firm‐level measures of taxes/worker.

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The Incidence of Payroll Taxation: Evidence from Chile

This paper reviews income distribution in developing (and transition) countries in recent decades. On average, before-tax income distribution in developing countries is less unequal than in industrial countries. However, unlike industrial countries, developing countries in general have not been able to use tax and transfer policies effectively to reduce income inequality. During the 1980s and 1990s, many developing countries experienced an increase in income inequality. The government health care and primary and secondary education programs in developing countries are not well targeted, but their incidence tends to be progressive.

Income Distribution and Tax and Government Social Spending Policies in Developing Countries

Social Democracy in the Global Periphery focuses on social-democratic regimes in the developing world that have, to varying degrees, reconciled the needs of achieving growth through globalized markets with extensions of political, social and economic rights. The authors show that opportunities exist to achieve significant social progress, despite a global economic order that favours core industrial countries. Their findings derive from a comparative analysis of four exemplary cases: Kerala (India), Costa Rica, Mauritius and Chile (since 1990). Though unusual, the social and political conditions from which these developing-world social democracies arose are not unique; indeed, pragmatic and proactive social-democratic movements helped create these favourable conditions. The four exemplars have preserved or even improved their social achievements since neoliberalism emerged hegemonic in the 1980s. This demonstrates that certain social-democratic policies and practices - guided by a democratic developmental state - can enhance a national economy's global competitiveness.

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Social Democracy in the Global Periphery: Origins, Challenges, Prospects

https://www.sii.cl/aprenda_sobre_impuestos/estudios/redistri.pdf

Taxes and income distribution in Chile: some unpleasant redistributive arithmetic

Redistributive Effects of Government Programmes: The Chilean Case

Las desigualdades económicas y la acción del estado : estudio preparado para el Programa Mundial del Empleo de la Organización Internacional del Trabajo

Chile: The role of asset redistribution in poverty-focused development strategies

La Intervención que realiza el Estado en la vida económica es ún lema de permanente controversia. El Estado es en todas las sociedades modernas un agente fundamental en el funcionamiento de la economía. Proporciones crecientes del ingreso nacional se canalizan a través del Estado o se generan en unidades productivas controladas por éste. Por otra parte y particularmente desde el revolucionario aporte de KEynes a la ciencia económica, e! Estado controla y maneja activamente un amplio conjunto de instrumentos de política económica, a través de los cuales define, interfiere y modifica las reglas del juego económico entre los varios agentes productores y consumidores. A su vez todos estos mecanismos le confieren la capacidad de generar beneficios o imponer pérdidas a los distintos grupos sociales. Ei Estado no es por lo tanto un ente neutro desde el punto distributivo. Extrae y reorienta recursos influido al menos parcialmente por las fuerzas, económicas y políticas, que respaldan y dan sustento a su acción. El efecto de la acción pública puede ser el de acentuar tendencias espontáneas provenientes del libre juego del mercado, o alternativamente el de corregir distorsiones o aún cambiar radicalmente el contenido distributivo del proceso de crecimiento económico. Esta característica es una de las que tornan controvertible su acción. Y es la que explica que la discusión relativa al rol del Estado en la economía sea muy antigua y que haya estado cargada de elementos ideológicos.

José Pablo Arellano

Papers

Redistributive Effects of Government Programmes: The Chilean Case

Las desigualdades económicas y la acción del estado : estudio preparado para el Programa Mundial del Empleo de la Organización Internacional del Trabajo

Chile: The role of asset redistribution in poverty-focused development strategies

El estado y las desigualdades sociales

Information and Vaccination: When Does Communication Reduce Hesitancy?