Redistribution - By tax-benefit component - EUROMOD estimates

The table provides the total redistribution of the tax benefit system, computed as the Gini coefficient of initial income (original income + pensions) minus the Gini coefficient of disposable income. Since Gini coefficients range between 0 (no inequality) and 1 (maximum inequality), redistribution theoretically ranges from -1 to 1. However, it usually shows positive values, meaning that the Gini coefficient of initial income is higher (more inequal distribution) than the Gini coefficient of disposable income (more equal distribution).

In turn, total redistribution (RE) is decomposed by the contribution of each tax-benefit component, as follows:

RE = BMT + BNT + T + SIC - RR

where:

• BMT is the contribution of means-tested benefits
• BNT is the contribution of non-means-tested benefits  
• T is the contribution of direct taxes  
• SIC is the contribution of SIC paid by the individual
• RR measures re-ranking, as the difference between the concentration index of disposable income (sorted by initial income) and the Gini coefficient of disposable income.

The contribution of each tax-benefit component is computed as the Gini coefficient of initial income (original income + pensions) minus the concentration index (sorted by initial income) of initial income minus (if direct taxes or SIC) or plus (if benefit) the respective component.

All the income concepts are equivalised. 

For more information on the economic and socio-demographic concepts used, see the EUROMOD Glossary and the list of breakdown variables.