Government and the inequality policies efficiency
Let´s imagine that the only function of a Government
were to redistribute income to make societies more equal. An easy way to
measure the efficiency of each Government would be then to calculate the
difference between the Gini index before taxes and subsidies and after.
It is fair
to mention that not all Governments are of equal size, some are bigger than
others and therefore more capable of redistribute income. To measure Government
size a “% Government expenditure over GDP” variable might be used.
The
following graph shows the relation between “% Government expenditure over GDP”
(horizontal axis) and the reduction of the Gini variable (before and after
taxes and subsidies) (vertical axis).
The
residuals of the fitted values might be understood as the efficiency given the
size of Government.
If all the
assumptions of this piece are correct Germany ’s
Government would be the most efficient and the UK
Comments