Fiscal policy and income inequality in SA: a quantile regression

IF 1.9 Q2 ECONOMICS INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS Pub Date : 2024-08-23 DOI:10.1108/ijse-12-2023-0956

Olumide Olusegun Olaoye, Mamdouh Abdulaziz Saleh Al-Faryan, Mosab I. Tabash

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Abstract

Purpose

The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric effects in fiscal policy – income inequality nexus in SA (i.e. we assessed the effects of fiscal policy on income inequality at different quantiles of the income inequality) using secondary data from 1980–2020. Third, the study also identifies the optimal fiscal policy instrument that achieve the greatest distributional objectives.

Design/methodology/approach

The study adopts the traditional ordinary least square (OLS) and the innovative Quantile estimation techniques.

Findings

The study found that fiscal policy marginally reduces the income inequality at the lower quantiles (t: 0.05). Specifically, the results show that government spending on health and education reduces income inequality at the lower quantiles (t: 0.05; t: 0.25), albeit exerts a statistically weak impact. On the other hand, the results show that at the upper quantiles, fiscal policy has no statistically significant impact on income inequality. However, we do not find either direct or indirect tax to have any impact on income inequality at any conventional level of significance. This suggests that government spending on health and education have the greater potential to reduce income inequality in South Africa. The research and policy implications are discussed.

Originality/value

The study addressed the asymmetric phenomenon in income inequality-fiscal policy nexus in South Africa.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0956

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南澳大利亚的财政政策和收入不平等：量化回归

本研究的目的有三个方面。首先，本研究探讨了南澳大利亚州财政政策与收入不平等之间的关系。其次，本研究利用 1980-2020 年的二手数据，探讨了南澳大利亚财政政策-收入不平等关系中潜在的非对称效应（即我们评估了财政政策对不同数量级收入不平等的影响）。第三，本研究还确定了实现最大分配目标的最优财政政策工具。研究采用了传统的普通最小二乘法（OLS）和创新的量值估计技术。具体而言，研究结果表明，政府在医疗和教育方面的支出减少了较低数量级的收入不平等（t：0.05；t：0.25），尽管在统计上影响较弱。另一方面，结果显示，在较高的数量组中，财政政策对收入不平等的影响在统计上并不显著。然而，在任何常规显著性水平下，我们都没有发现直接税或间接税对收入不平等有任何影响。这表明，政府在卫生和教育方面的支出更有可能减少南非的收入不平等现象。本研究探讨了南非收入不平等与财政政策关系中的非对称现象。同行评议本文的同行评议记录可在以下网址查阅：https://publons.com/publon/10.1108/IJSE-12-2023-0956

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来源期刊

INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS ECONOMICS-

CiteScore

3.20

自引率

5.30%

发文量

期刊介绍： The International Journal of Social Economics publishes original and peer-reviewed theoretical and empirical research in the field of social economics. Its focus is on the examination and analysis of the interaction between economic activity, individuals and communities. Social economics focuses on the relationship between social action and economies, and examines how social and ethical norms influence the behaviour of economic agents. It is inescapably normative and focuses on needs, rather than wants or preferences, and considers the wellbeing of individuals in communities: it accepts the possibility of a common good rather than conceiving of communities as merely aggregates of individual preferences and the problems of economics as coordinating those preferences. Therefore, contributions are invited which analyse and discuss well-being, welfare, the nature of the good society, governance and social policy, social and economic justice, social and individual economic motivation, and the associated normative and ethical implications of these as they express themselves in, for example, issues concerning the environment, labour and work, education, the role of families and women, inequality and poverty, health and human development.