THE EFFECTS OF GOVERNMENT SOCIAL SPENDING ON THE DISTRIBUTION OF INCOME: A PANEL DATA ANALYSIS OF OECD COUNTRIES

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Income inequality has increased since the 1990s in most OECD-countries. The primary instrument to affect income distribution for governments is fiscal policy. Redistribution effects of the fiscal policy are determined by the size, composition and the progressivity of each policy tool. This paper examines the impact of the government social expenditure on income distribution within the scope of both total and sub-categories of expenditures for 17 OECD countries during 1995 to 2012 by using panel data analysis. The findings suggest that increase in size of government has a positive impact on income distribution. The results also show that higher shares of GDP on total social expenditure, active labor market programs, survivor and unemployment expenditures promote a less unequal distribution of income.

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Income Distribution , Redistributive Policies , Social Expenditures

dokuz eylul university the journal of graduate school of social sciences

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dokuz eylul university the journal of graduate school of social sciences