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Linking taxation and social protection: Evidence on redistribution and poverty reduction in Ethiopia

Author

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  • Kalle Hirvonen
  • Giulia Mascagni
  • Keetie Roelen
Abstract
Although redistribution results from the simultaneous effects of taxes and transfers, analyses of their distributional effects in low‐income countries have largely been undertaken from singular perspectives. This article jointly assesses the distributional effect of taxes and transfers (through social protection) using Ethiopia as a case study. We find that Ethiopia's flagship social protection programme is more effective than income taxation in achieving poverty reduction, while neither policy achieves a sizeable reduction in overall inequality. We also find that Ethiopia does not currently have the capacity to close the poverty gap or to fully fund its main safety net programme using domestic income sources alone. Bien que la redistribution des revenus résulte de l’impact combiné des impôts et des transferts, l’effet redistributif de chacun de ces facteurs dans les pays à faible revenu a le plus souvent été analysé de façon séparée. Cet article propose d’évaluer en parallèle l’effet redistributif des impôts et celui des transferts (à travers le système de protection sociale) en s’appuyant sur le modèle éthiopien. Il montre que le programme phare de l’Ethiopie en matière de protection sociale est plus efficace que l’imposition des revenus pour réduire la pauvreté, mais que ni la politique sociale ni la fiscalité ne permettent à ce pays de parvenir à une réduction notable du niveau global des inégalités. Il nous apprend également que l’Ethiopie n’a actuellement pas les moyens de faire reculer la pauvreté au sein de sa population, ni de financer intégralement son principal programme de protection sociale, en ne comptant que sur des revenus de source nationale.

Suggested Citation

  • Kalle Hirvonen & Giulia Mascagni & Keetie Roelen, 2018. "Linking taxation and social protection: Evidence on redistribution and poverty reduction in Ethiopia," International Social Security Review, John Wiley & Sons, vol. 71(1), pages 3-24, January.
    • Handle: RePEc:wly:intssr:v:71:y:2018:i:1:p:3-24
    DOI: 10.1111/issr.12159
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    Cited by:

    1. Beneberu Assefa Wondimagegnhu & Beyadegie Wubie Worku & Amelmal Afework Tamene & Almaz Giziew Adugna, 2022. ""Struggling to Keep the Wolf from the Door"? Analysis of Rural Poverty Using a Consumption-Based Approach in West Belesa District, Ethiopia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(1), pages 319-350, January.
    2. Vincenzo Vinci & Keetie Roelen, 2020. "The relevance of institutions and people’s preferences in the PSNP and IN‐SCT programmes in Ethiopia," International Social Security Review, John Wiley & Sons, vol. 73(1), pages 139-167, January.
    3. World Bank, 2020. "Ethiopia Poverty Assessment," World Bank Publications - Reports 33544, The World Bank Group.
    4. Ambel,Alemayehu A. & Tesfaye,Wondimagegn Mesfin & Yonis,Manex Bule, 2022. "A Gendered Fiscal Incidence Analysis for Ethiopia : Evidence from Individual-Level Data," Policy Research Working Paper Series 10130, The World Bank.
    5. Vinci, Vincenzo & Roelen, Keetie, 2018. "Institutional factors and people's preferences in the implementation of social protection: the case of Ethiopia," MERIT Working Papers 2018-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).

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