Volume 18, Issue 9 (2011)
J Tax Res 2011, 18(9): 61-82 |
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Piraee K, Seif B. The Impact of Self-targeted Subsidies on Social Welfare in Iran. J Tax Res 2011; 18 (9) :61-82
URL: http://taxjournal.ir/article-1-106-en.html
URL: http://taxjournal.ir/article-1-106-en.html
1- Associate Prof. of Economics at Azad University, Shiraz
2- PhD Student of Economics at Azad University, Shiraz
2- PhD Student of Economics at Azad University, Shiraz
Abstract: (6667 Views)
Social welfare especially the social welfare of low income groups has always been important for governments, hence, subsidies are paid on different goods to decrease the prices and as a result, increase purchasing power. However, because of not being targeted, the relatively rich benefit from subsidies more than the poor. Therefore it seems to be necessary to design self-targeted safety-net programs. This research aims at investigating the welfare consequences of self-targeted subsidies and to answer this question: what is the impact of transferring one unit of subsidies paid on subsidized goods mostly used by the rich to non-subsidized goods mostly used by the poor on welfare-improving? For this purpose, we calculated the change in social welfare caused by self-targeted subsidies. The results show that self-targeted subsidies increase social welfare. The extent of this increase is negatively related to inequality aversion parameter, while positively related to the share of non-subsidized goods in low income deciles budget.
Keywords: Self-targeted Subsidies, Social Welfare, Income Deciles, Atkinson Social Welfare Function, Inequality Aversion Parameter
Type of Study: Research |
Received: 2010/11/24 | Accepted: 2011/02/1 | Published: 2014/03/11
Received: 2010/11/24 | Accepted: 2011/02/1 | Published: 2014/03/11
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