FISCAL POLICY AND INCOME INEQUALITY

IMF POLICY PAPER - January 22, 2014 - Fiscal policy is the primary tool for governments to affect income distribution.Rising income inequality in advanced and developing economies has coincided with growing public support for income redistribution. This comes at a time when fiscal restraint is an important priority in many advanced and developing economies. In the context of the Fund’s mandate to promote growth and stability, this paper describes: (i) recent trends in the inequality of income, wealth, and opportunity in advanced and developing economies; (ii) country experience with different fiscal instruments for redistribution; (iii) options for the reform of expenditure and tax policies to help achieve distributive objectives in an efficient manner that is consistent with fiscal sustainability; and (iv) recent evidence on how fiscal policy measures can be designed to mitigate the impact of fiscal consolidation on inequality. This paper does not advocate any particular redistributive goal or policy instrument for fiscal redistribution.
About Jack Berlin

International Monetary Fund - About Prizm Share
INCOME INEQUALITY FISCAL POLICY INCOME INEQUALITY redistribute developing economy
About Jack Berlin

International Monetary Fund - About Prizm Share
INCOME INEQUALITY FISCAL POLICY INCOME INEQUALITY redistribute developing economy
 
Â©2014 International Monetary Fund 
  
IMF POLICY PAPER 
FISCAL POLICY AND INCOME INEQUALITY 
IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, 
or reviewing existing IMF policies and operations. The following document(s) have been 
released and are included in this package: 
 
ï‚· The Staff Report on Fiscal Policy and Income Inequality, prepared by IMF staff and 
completed on January 22, 2014 to brief the Executive Board on February 7, 2014.  
The Executive Directors met in an informal session, and no decisions were taken at this 
meeting. 
   
The policy considerations in this paper should be attributed to IMF staff and not to the IMF 
or its Executive Board. The analysis was prepared by the staff of the Fiscal Affairs Department 
and has benefited from comments and suggestions by staff from other IMF departments, as 
well as by Executive Directors following their discussion of the report on February 7, 2014. 
 
The policy of publication of staff reports and other documents allows for the deletion of 
market-sensitive information. 
 
Electronic copies of IMF Policy Papers  
are available to the public from  
http://www.imf.org/external/pp/ppindex.aspx  
 
International Monetary Fund 
Washington, D.C. 
January 23, 2014 
 
 
 
FISCAL POLICY AND INCOME INEQUALITY 
 
 
EXECUTIVE SUMMARY 
Fiscal policy is the primary tool for governments to affect income distribution.  
Rising income inequality in advanced and developing economies has coincided with 
growing public support for income redistribution. This comes at a time when fiscal 
restraint is an important priority in many advanced and developing economies. In the 
context of the Fundâ€™s mandate to promote growth and stability, this paper describes: 
(i) recent trends in the inequality of income, wealth, and opportunity in advanced and 
developing economies; (ii) country experience with different fiscal instruments for 
redistribution; (iii) options for the reform of expenditure and tax policies to help achieve 
distributive objectives in an efficient manner that is consistent with fiscal sustainability; 
and (iv) recent evidence on how fiscal policy measures can be designed to mitigate the 
impact of fiscal consolidation on inequality. This paper does not advocate any particular 
redistributive goal or policy instrument for fiscal redistribution. 
 
Both tax and expenditure policies need to be carefully designed to balance 
distributional and efficiency objectives, including during fiscal consolidation. The 
appropriate mix of instruments will depend on administrative capacity, as well as on 
societyâ€™s preferences for redistribution, the role envisaged for the state, and political 
economy considerations. Options for redistributive policies that help minimize 
efficiency costs, in terms of their effects on incentives to work and save, are the 
following: 
ï‚· 
In advanced economies: (i) using means-testing, with a gradual phasing out of 
benefits as incomes rise to avoid adverse effects on employment; (ii) raising retirement 
ages in pension systems, with adequate provisions for the poor whose life expectancy 
could be shorter; (iii) improving the access of lower-income groups to higher education 
and maintaining access to health services; (iv) implementing progressive personal 
income tax (PIT) rate structures; and (v) reducing regressive tax exemptions. 
ï‚· 
 In developing economies: (i) consolidating social assistance programs and 
improving targeting; (ii) introducing and expanding conditional cash transfer programs 
as administrative capacity improves; (iii) expanding noncontributory means-tested 
social pensions; (iv) improving access of low-income families to education and health 
services; and (v) expanding coverage of the PIT.  
Innovative approaches, such as the greater use of taxes on property and energy (such 
as carbon taxes) could also be considered in both advanced and developing economies.
January 22, 2014 
FISCAL POLICY AND INCOME INEQUALITY 
2 
INTERNATIONAL MONETARY FUND 
Approved By 
Sanjeev Gupta 
Prepared by staff from Fiscal Affairs Department supervised by 
Sanjeev Gupta and Michael Keen, and comprising Benedict Clements, 
Victoria Perry, David Coady, Ruud De Mooij, Stefania Fabrizio, Baoping 
Shang, Allan Dizioli, Luc Eyraud, Csaba Feher, Valentina Flamini, 
Alvar Kangur, Javier Kapsoli, Carlos Mulas-Granados, Peter Mullins, 
Philippe Wingender, Dora Benedek, Ryan Espiritu, and Louis Sears. 
Production assistance was provided by Pierre Jean Albert, Jeffrey 
Pichocki, and Mileva RadisavljeviÄ‡. 
 
CONTENTS 
INTRODUCTION __________________________________________________________________________________ 4Â 
TRENDS IN INEQUALITY__________________________________________________________________________ 7Â 
A. Inequality of Income ____________________________________________________________________________ 7Â 
B. Inequality of Wealth ___________________________________________________________________________ 11Â 
C. Lifetime Inequality _____________________________________________________________________________ 13Â 
D. Inequality of Opportunity _____________________________________________________________________ 13Â 
FISCAL REDISTRIBUTION _______________________________________________________________________ 14Â 
A. Advanced Economies__________________________________________________________________________ 15Â 
B. Developing Economies ________________________________________________________________________ 18Â 
DESIGN OF EFFICIENT REDISTRIBUTIVE FISCAL POLICY ______________________________________ 21Â 
A. Conceptual Framework ________________________________________________________________________ 21Â 
B. Social Spending _______________________________________________________________________________ 25Â 
C. Tax Design _____________________________________________________________________________________ 36Â 
D. Summary ______________________________________________________________________________________ 42Â 
FISCAL CONSOLIDATION AND INEQUALITY __________________________________________________ 43Â 
A. Advanced Economies__________________________________________________________________________ 44Â 
B. Developing Economies ________________________________________________________________________ 48Â 
Appendix I. Who Benefits from Tax Incentives for Charitable Giving?____________________________ 50Â 
 
BOXES 
1. Efficiency and Fiscal Redistribution ______________________________________________________________ 6Â 
2. Rising Public Support for Redistribution _________________________________________________________ 9Â 
3. Redistributive Fiscal Policy: Evidence from Regression Analysis _______________________________ 15Â 
4. Fiscal Policy and Income Inequality in Latin America __________________________________________ 19Â 
5. What is the Shape of the Optimal Income Tax Schedule? _____________________________________ 23Â 
FISCAL POLICY AND INCOME INEQUALITY 
INTERNATIONAL MONETARY FUND 3 
6. In-Work Benefits  and Credits _________________________________________________________________ 25Â 
7. Conditional Cash Transfer Programs __________________________________________________________ 32 
 
FIGURES 
1. Trends in Disposable Income Inequality, 1980â€“2010 ____________________________________________ 8Â 
2. Gross Income Share of Top One-Percent in Selected Advanced and  
    Developing Economies, 1925â€“2012 ___________________________________________________________ 10Â 
3. Poverty Rates in Developing Economies, 1980â€“2010 __________________________________________ 11Â 
4. Inequality of Wealth and Incomes in Selected Economies, early-2000s _______________________ 12Â 
5. The Great Gatsby Curve: Income Inequality and Economic Mobility , mid-1980s _____________ 14Â 
6. Redistributive Impact of Fiscal Policy in Advanced Economies, mid-2000s ____________________ 16Â 
7. Diminishing Fiscal Redistribution, 1985â€“2005 _________________________________________________ 17Â 
8. Tax Revenues and Social Spending in Advanced and Developing Economies _________________ 19Â 
9. Social Protection Coverage and Incidence in Developing Economies, late-2000s _____________ 20Â 
10. Benefit Incidence of Education and Health Public Spending _________________________________ 21Â 
11. Means-tested and Non-means-tested Family Benefits, 2010 ________________________________ 28Â 
12. Top PIT Rates, 1980â€“2012 ____________________________________________________________________ 37Â 
13. Redistributive Effect of Fiscal Adjustments, 2007â€“2012 ______________________________________ 45Â 
14. Cumulative Change in Households Disposable Income due to Simulated Fiscal  
      Consolidation Measures, 2008â€“12 ___________________________________________________________ 47Â 
15. Simulated Impact of Fiscal Consolidation (FC) Measures on Gini Index, 2012 ________________ 47Â 
16. Unemployment Rates and Gini Coefficients During Large Fiscal Adjustments in  
     Developing Economies _______________________________________________________________________ 48Â 
 
TABLES 
1. Summary: Fiscal Reform Options for Efficient Redistribution in Advanced and  
   Developing Economies _________________________________________________________________________ 43Â 
 
APPENDICES 
I. Who Benefits from Tax Incentives for Charitable Giving? ______________________________________ 50Â 
II. Recent Fiscal Consolidations and Income Inequality __________________________________________ 51Â 
 
APPENDIX FIGURES 
1. Aggregate Effect and Composition of Simulated Fiscal Consolidation Measures, 2008â€“12 ___ 51Â 
2. Change in Household Disposable Income by Type of Measure and Income Group, 
2007â€“12 ________________________________________________________________________________________ 53Â 
 
REFERENCES______________________________________________________________________________________54 
 
  
 
 
FISCAL POLICY AND INCOME INEQUALITY 
4 
INTERNATIONAL MONETARY FUND 
INTRODUCTION 
1.      
Income inequality has increased in both advanced and developing economies in recent 
decades.1 Increasing inequality has been attributed to a range of factors, including the globalization 
and liberalization of factor and product markets; skill-biased technological change; increases in labor 
force participation by low-skilled workers; declining top marginal income tax rates; increasing 
bargaining power of high earners; and the growing share of high-income couples and single-parent 
households (OECD, 2008; Alvaredo and others, 2013; Hoeller, Joumard, and Koske, 2014). Many of 
these developments have had beneficial effects on growth and poverty reduction both nationally 
and globally (Chen and Ravallion, 2010; Milanovic, 2012). 
2.      
 There is growing evidence that high income inequality can be detrimental to 
achieving macroeconomic stability and growth. Recent empirical work finds that high levels of 
inequality are harmful for the pace and sustainability of growth (Ostry, Berg, and Tsangarides, 
forthcoming). Others have argued that rising inequality may have been an important contributing 
factor to the global financial crisis.2 Moreover, evidence from public surveys in various countries 
indicates that widening income inequality has been accompanied by growing public demand for 
income redistribution, especially in countries most strongly affected by the crisis. This comes at a 
time when high public debt ratios in the advanced economies, and emerging vulnerabilities in the 
developing economies, have made fiscal restraint an important priority, and point to the importance 
of sensitivity to distributional concerns in designing consolidation packages. In this light, income 
inequality can be of macroeconomic concern for country authorities, and the Fund should 
accordingly seek to understand the macroeconomic effects of inequality. In addition, in its policy 
advice, the Fund should be mindful of how macroeconomic policies (including fiscal policies) affect 
income distribution and their consistency with the distributional goals of country authorities.   
3.      Fiscal policy is the primary tool for governments to affect income distribution.3 Fiscal 
policy has three main objectivesâ€”to support macroeconomic stability, provide public goods and 
correct market failures, and redistribute income. Both tax and spending policies can alter the 
distribution of income, both over the short and medium term. For example, in-kind benefits, such as 
education spending, can affect the inequality of market incomes (i.e., incomes before taxes and 
transfers) through their impact on future earnings. Other fiscal instruments, such as income taxes 
and cash transfers, can reduce the inequality of disposable incomes (i.e., incomes after direct taxes 
                                                   
1In this paper, the category â€œdeveloping economiesâ€ covers both emerging and low-income economies. These are 
merged together because they face similar issues, and data availability for both groups of economies is similar. 
2Rajan (2010) argues that rising inequality led to political pressure for more housing credit, which distorted lending in 
the financial sector. Kumhof and RanciÃ¨re (2010) show that in the United States, the Great Depression starting in 
1929 and the Great Recession starting in 2007 were both preceded by a sharp increase in income and wealth 
inequality and by a rapid rise in debt-to-income ratios among lower- and middle-income households. 
3Other tools to influence income distribution include labor market, product market, and institutional reforms, as well 
as asset redistribution. These can have an influence on inequality directly or through their effects on growth.  
FISCAL POLICY AND INCOME INEQUALITY 
INTERNATIONAL MONETARY FUND 5 
and transfers), including indirectly via their impact on market incomes due to work and savings 
responses.  
4.      The Fund has long recognized the nexus between income distribution and fiscal policy. 
In the late 1980s there was growing recognition and discussion of the potential effects of 
macroeconomic and structural adjustment programs on poverty and inequality, including by the 
IMFâ€™s Executive Board (IMF, 1995). These discussions highlighted the importance of social safety nets 
to protect the poor and safeguard their access to essential public services, such as primary 
education and healthcare. Guidance notes from management on how income distribution and social 
expenditures should be addressed by staff, in the context of the Fundâ€™s mandate, were issued in the 
mid-1990s (IMF, 1996, 1997). The Fund also expanded its analytical work in this area, drawing on 
contributions from leading academics (Tanzi and Chu, 1998; Tanzi, Chu, and Gupta, 1999). The 
growing attention of the Fund to the impact of fiscal policy on the poor was also reflected in the 
creation of the Poverty Reduction and Growth Facility (later PRGT) in the late 1990s, which 
emphasized the importance of pro-poor government budgets. More recently, the work on fiscal 
policy and equity was revived (Bastagli, Coady, and Gupta, 2012) and subsequently broadened to 
cover jobs and growth; a guidance note on the latter was issued to Fund staff (IMF, 2013a). The 
macroeconomic gains from greater gender equity, and fiscal policies to help achieve this, have also 
been addressed in recent work (Elborgh-Woytek and others, 2013). 
5.      Against the background of recent trends in income distribution and experience with 
the use of redistributive fiscal instruments in both advanced and developing economies, this 
paper explores how a societyâ€™s distributional objectives can be achieved in the most efficient 
manner. Redistributive fiscal policies can affect private decisions in various ways, including decisions 
to seek employment, to increase labor effort, and to save and invest. These, in turn, can potentially 
affect both the level and growth of economic activity, either positively and negatively. Given the 
Fundâ€™s mandate to promote growth and stability, it is important that the potential tradeoffs or 
complementarities between fiscal redistribution and growth are well understood. In particular, there 
is a need to identify fiscal instruments that achieve distributional objectives at a minimum cost to 
economic efficiency (Box 1). In doing so, the paper draws extensively on country experience, as 
discussed in the literature,4 as well as in IMF technical assistance reports.5 The paper also discusses 
how fiscal policies can protect households from poverty. 
 
                                                   
4See, for example, World Bank (2006); OECD (2011a, 2012); Asian Development Bank (2012); and Joumard, Pisu, and 
Bloch (2012). 
5The paper has also benefited from consultation with Civil Society Organizations and labor unions on its principal 
conclusions and policy recommendations. In their comments, they emphasized the limited capacity of developing 
economies to target social spending and protect the poor from spending cuts; the need to protect low-income 
workers, who may have short life expectancies, during pension reforms that raise retirement ages; the need to 
strengthen information sharing on corporate taxation; and concerns that value added taxes, in practice, were 
regressive.        
FISCAL POLICY AND INCOME INEQUALITY 
6 
INTERNATIONAL MONETARY FUND 
6.      This paper does not advocate any particular redistributive goal or policy instrument 
for fiscal redistribution. The motivation for the paper is to provide guidance to policymakers on 
options to achieve their desired level of redistribution in the most efficient manner. The paper does 
not provide guidance on the optimal degree of fiscal redistribution, which is country-specific and 
depends, among other factors, on preferences for the role of the state and the costs involved in 
meeting goals for redistribution.  
Box 1. Efficiency and Fiscal Redistribution 
The term â€œefficiencyâ€ in economics is often used loosely. At the most precise level, it means Pareto 
efficiencyâ€”a situation in which no individual can be made better off without making some other individual 
worse off. An efficiency-improving reform in this sense would then be one that makes someone better off 
and no one worse off. But this is a very demanding test, both in assessing well-being and removing any 
possibility that someone may be adversely affected by change. Reflecting this, the term â€œefficiency gainâ€ is 
often used more loosely to refer to increase in the aggregate level or growth of income; and this is the 
interpretation in mind here. 
A closely related concept is deadweight loss (or excess burden), which measures the inefficiency associated 
with economic distortions. For example, the welfare loss of a distortionary tax is measured by the burden 
imposed on individuals in excess of the revenue generated by the taxâ€”and conversely, for a subsidy, the 
burden in excess of the revenue loss.  
Importantly, there may be instances of reform that improve both efficiencyâ€”in any of these sensesâ€”and 
equity (Boadway and Keen, 2000). For example, when the rich are altruistically inclined towards the poor, 
redistribution can be obviously Pareto improving. Also, the provision of social insurance can encourage 
risk-taking and increase investment returns, thus also potentially improving efficiency. Fiscal redistribution 
can also relax credit constraints facing poor households and allow them to invest in education, boosting 
human capital and enhancing efficiency. Interestingly, these examples show that redistribution may yield 
efficiency gains which are also reflected in higher economic growth.  
Identifying instances in which both equity and efficiency can be improved is a primary concern of this paper, 
though some trade-off between them becomes inevitable once these have been fully exploited. 
7.      The structure of the paper is as follows. The next section describes trends in inequality 
across advanced and developing economies. The discussion covers inequality of incomes and 
wealth. It also examines the evidence on the persistence of income inequality across generations, an 
indicator of equality of opportunity. This is followed by a review of empirical evidence on the 
redistributive impact of fiscal policies and the extent to which fiscal policy can explain differences in 
inequality across countries and over time. The paper next focuses on the overall design of 
redistributive fiscal policy as well as of specific tax and spending instruments, and how these can be 
designed to minimize the efficiency costs of redistribution. The final section discusses the 
redistributive impact of fiscal consolidation, which can affect inequality both in the long run through 
channels explained in earlier sections and through its short-run effects on output and employment.  
 
 
FISCAL POLICY AND INCOME INEQUALITY 
INTERNATIONAL MONETARY FUND 7 
TRENDS IN INEQUALITY 
8.      Economic inequality can be viewed from different perspectives. Each of these can 
provide insights into the nature, causes, and consequences of economic inequality. 
ï‚· 
Inequality of income: This focuses on the inter-personal distribution of income, which captures 
how individual or household incomes are distributed across the population at a point in time.  
ï‚· 
Inequality of wealth: Here the focus is on the distribution of wealth across individuals or 
households, which reflects differences in savings as well as bequests and inheritances.  
ï‚· Lifetime inequality: This focuses on measuring inequality in incomes or earnings for an individual 
over his or her lifetime, rather than for a single year.  
ï‚· 
Inequality of opportunity: This focuses on the relationship between income inequality and social 
mobility, in particular the extent of mobility between income groups across generations. 
A.   Inequality of Income 
9.      Over the last three decades, inequality in the personal distribution of income has 
increased in most economies. Figure 1 presents trends in the average (unweighted) Gini coefficient 
for disposable incomes (i.e., market incomes minus direct taxes plus cash transfers) across regions 
over recent decadesâ€”which reflects both the inequality of market-determined incomes as well as 
the distributional impact of income taxes and public transfers.6 The Gini coefficient ranges between 
0 (denoting complete equality) and 1 (denoting complete inequality).7 Between 1990 and 2010, the 
Gini for disposable income has increased in nearly all advanced and emerging European economies. 
Over one-third of advanced economies and half of emerging Europe experienced increases in their 
Ginis exceeding 3 percentage points, with most of the increases in emerging Europe occurring 
between 1990 and 1995 during the early years of their transition to market-based systems. 
Inequality also rose in most economies in Asia and the Pacific and in Middle East and North Africa. 
While average inequality fell in sub-Saharan Africa over this period, it still rose by more than 
3 percentage points in more than one-fourth of these economies. Inequality also increased in over 
one-third of the economies in Latin America, although on average there was a slight decline. 
However, since 2000 there has been a substantial decline in the Gini in nearly all countries in this 
                                                   
6Data on the inequality of market incomes is much more limited, being available mostly for advanced economies and 
for a shorter time period. For country specific data on Ginis for disposable income, see Bastagli, Coady, and Gupta 
(2012). For a discussion of the issues that arise when comparing income inequality measures across countries and 
time, see Atkinson and Bourguignon (2000), Atkinson and Brandolini (2001), and Deaton and Zaidi (2002). 
7The Gini is less sensitive to inequality at the extremes of the income distribution than many other commonly used 
measures. However, other inequality measures show a similar trend in overall income inequality. For instance, the 
ratio of the income share of the top 20 percent of the income distribution to the share of the bottom 20 percent has 
a correlation coefficient with the Gini of around 0.85. 
FISCAL POLICY AND INCOME INEQUALITY 
8 
INTERNATIONAL MONETARY FUND 
region. This increase in inequality across the globe has also been accompanied by a widespread rise 
in public support for redistribution (Box 2). 
Figure 1. Trends in Disposable Income Inequality, 1980â€“2010 
Sources: OECD; Luxembourg Income Study Database; Socio-Economic Database for Latin America and 
the Caribbean (SEDLAC); World Bank; Eurostat. 
 
Note: Disposable income is income available to finance consumption once income taxes and public 
transfers have been netted out. Therefore, the distributional impacts of indirect taxes and in-kind 
transfers are not included. The Gini coefficient ranges between 0 (complete equality) and 1 (complete 
inequality). Number of countries in parentheses.  
 
10.      More striking than changes in inequality within regions are the persistent differences 
across regions. For instance, between 1990 and 2010, average inequality in each region changed by 
less than 3Â¼ percentage points. In contrast, average inequality in the two most unequal regions 
(sub-Saharan Africa and Latin America) remained 12 percentage points higher than the two most 
equal regions (emerging Europe and advanced economies). As the following section shows, a large 
proportion of the differences in regional average disposable income inequalities can be explained 
by differences in fiscal policies, especially in the levels and composition of taxes and spending. 
 
 
 
 
 
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
1980
1985
1990
1995
2000
2005
2010
G
in
i c
oe
ff
ic
ie
nt
Advanced (21)
Asia and Pacific (14)
Emerging Europe (21)
Latin America and Caribbean (19)
Middle East and North Africa (12)
Sub-Saharan Africa (22)
FISCAL POLICY AND INCOME INEQUALITY 
INTERNATIONAL MONETARY FUND 9 
 
11.      More recently, the public debate has focused on the sharp increase in the share of 
total income going to top income groups. Over the last three decades the market income shares 
of the richest one-percent of the population have increased substantially in English-speaking 
advanced economies, as well as in China and India (Figure 2). For example, in the United States, the 
share of market income captured by the richest 10 percent surged from around 30 percent in 1980 
to 48 percent by 2012, while the share of the richest one-percent increased from 8 percent to 
19 percent. Even more striking is the fourfold increase in the income share of the richest 0.1 percent, 
from 2.6 percent to 10.4 percent. There has been substantial variation across countries in how much 
the share of the highest income groups has risen. The increase in the share of the top one-percent 
has been much less pronounced in Southern European and Nordic economies, and hardly any 
increases have been observed in continental Europe and Japan. While there is broad consensus 
Box 2. Rising Public Support for Redistribution 
International public surveys monitor public support for redistributive policy in both advanced and 
developing economies. These surveys, which include the World Value Surveys (WVS), Regional 
Barometers, and International Social Surveys, ask citizens whether they favor more or less redistribution. In 
the WVS, respondents are asked to indicate, on a scale from 1 to 10, whether â€œincomes should be made 
more equalâ€ (1) or whether the country â€œneeds larger income differences as incentiveâ€ (10). For our 
purposes, we divide these responses in two categories: answers 1 to 5 indicate that the respondents prefer 
more redistribution, and answers 6 to 10 indicate preference for less redistribution. A similar approach is 
applied to other surveys to find the share of the population that supports more redistribution. 
The evidence indicates that public support for redistributive policies has grown in recent decades. 
Between the late-1990s and the late-2000s, public support for redistribution increased in almost 70 percent 
of the advanced and developing economies surveyed. For instance, support increased substantially in 
Finland, Germany, and Sweden, and also in China and India (see Figure). In the late-1990s, results for only 
15 economies out of the 57 in the sample (26 percent) indicate majority support for more redistribution. 
By the late-2000s, the percentage of countries where a majority supported more redistribution grew to 
56 percent. These findings are consistent with other surveys of public opinion (e.g., OECD, 2008; ADB, 
2012).  
                          
Support for redistribution grew more in 
countries where inequality increased and, 
more recently, in advanced economies 
where the crisis hit hardest. For instance, 
public support between the late-1990s and 
the late-2000s grew by more than 
30 percentage points in China, Finland, 
Germany and several Eastern European 
countries, where the income Gini increased 
by over 20 percent. At the same time, 
support declined in countries where the Gini 
decreased, including in Bulgaria, Mexico, 
Peru, and Ukraine. Rising inequality thus 
seems to partly explain the increased public support for redistribution. Between 2008 and 2011, among 
advanced economies, public opinion changed more in favor of redistributive policies in countries that 
experienced large declines in GDP, such as Portugal, Ireland, and Slovenia. 
ALB
ARG
ARM
AUS
AUT
AZE
BLR
BEL
BIH
BRA
BGR
CAN
CHL
CHN
HRV
DNK
EST
FIN
FRA
GEO
DEU
HUN
ISL
IND
IRL
ITA
JPN
KOR
LVA
LTU
MKD
MLT
MEX
MDA
MNE
NLD
NGA
NOR
PER
POL
PRT
ROM
RUS
SRB
SVK
SVN
ZAF
ESP
SWE
CHE
TPE
TUR
UKR
GBR
USA
URY
0.1
0.3
0.5
0.7
0.9
0.1
0.3
0.5
0.7
0.9
La
te
 2
00
0s
Late 1990s
Figure. Public Support for Redistribution
Source: Integrated Values Survey 1981â€“2008