Exercise 8.6

Express the total redistribution exerted by the Canadian tax and transfer system as vertical equity minus horizontal inequity (reranking), using Gini and concentration indices.

Answer
One can express the redistributive impact on inequality as follows:

IX - IN = (IX - ICN) - (ICN - IN)=0,17610126

 

Vertical equity

(IX - ICN)

 0,202405
Horizental equity

(ICN - IN)

 -0,026304