Mobility and the Lifetime Distributional Impact of Tax and Transfer Reforms

Presenter: Barra Roantree, Institute for Fiscal Studies

The distributional impact of proposed reforms plays a central role in public debates around tax and transfer policy. In this paper we build a statistical model of earnings, employment and demographics over the life-cycle, which we use to consider the long-run and short-run distributional effects of two tax and transfer reforms modelled in the UK context: (i) changes to out-of-work versus in-work benefits, and (ii) adjustments to income tax rates. In both cases we find that the long-run distributional impact differs in important ways to that implied by a standard cross-section analysis.