Skewness, Tax Progression, and Demand for Redistribution
Translated title
Evidence from the UK
Publication date
2017
Document type
Research article
Author
Pogorelskiy, Kirill
Organisational unit
Series or journal
Discussion paper series / Centre for Research in Economic Theory and Applications
Periodical volume
29
Part of the university bibliography
✅
Abstract
We introduce a skewness-based approach to measure tax progression and demand for redistribution. Adapting a novel, quantilebased statistical measure of skewness to right-skewed income distributions, we uncover its political economy foundation, by simultaneously relating the same measure to the classical model of income redistribution due to Meltzer and Richard (1981), to the Prospect Of Upward Mobility (POUM) mechanism due to B`enabou and Ok (2001), and to the progressivity of a tax schedule. In an empirical analysis of UK income distributions in 1979 – 2013, we find that skewness has increased over time, with the rich moving further away from the median. While the magnitude of the increase has remained small enough so that observed redistribution (or lack thereof ) could be consistent with POUM hypothesis, more recent periods show an increase in tax progression.
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