The global rise in income inequality has heightened interest in how fiscal policy — particularly the composition of tax revenues — affects income distribution.
The relationship between tax structures and income inequality
German Economic Institute (IW)
The global rise in income inequality has heightened interest in how fiscal policy — particularly the composition of tax revenues — affects income distribution.
This study examines the relationship between government revenues from direct and indirect taxes and income inequality, contributing to the tax incidence literature through three key innovations: it focuses on a recent period (2000–2012), compares countries with different income levels and tax structures, and addresses endogeneity using the System Generalized Method of Moments (System GMM) estimator. The empirical analysis reveals that a greater reliance on indirect taxation is associated with higher income inequality, while a larger share of direct taxes correlates with reduced inequality. These patterns hold across both OECD and non-OECD countries. Given the higher Gini coefficients observed in non-OECD economies, the findings highlight the importance of enhancing tax progressivity as a policy strategy to reduce income disparities and promote more equitable economic development.
The relationship between tax structures and income inequality
German Economic Institute (IW)
Trade and Cooperation Between the EU and the Gulf States
Driven especially by the policies of US President Donald Trump, rising global economic fragmentation and geopolitical disorder have lent renewed strategic importance to the prospective free trade agreement (FTA) between the European Union (EU) and the Gulf Cooperation Council (GCC).
IW
Free and Fair Trade Club to build Middle Power Weight
This paper proposes that the EU should build a cooperation platform together with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
IW