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Redistribution in Switzerland: Social cohesion or simple smoothing of lifetime incomes?

Summary

Using the example of Switzerland, this paper examines the extent to which the state and the social security institutions change the income distribution. Two sets of questions are examined: (1) Who benefits from the public services, and who bears the public costs? (2) To what extent does an annual redistribution involve redistribution (a) across households with different lifetime income, and (b) across different phases of life within the same households? Budget incidence analyses and pseudo panel procedures allow to compare annual and lifetime household incomes that arise before and after transfers. The results suggest that public interventions induce substantial redistribution, which is due primarily however, to income-smoothing transfers within households and not to redistribution across households.

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I thank Prof Monika Bütler and Prof Franz Jaeger for their helpful comments. I am also grateful to the Swiss Federal Statistical Office for granting access to the Survey of Income and Expenditure.

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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License ( https://creativecommons.org/licenses/by/2.0 ), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Engler, M. Redistribution in Switzerland: Social cohesion or simple smoothing of lifetime incomes?. Swiss J Economics Statistics 147, 107–155 (2011). https://doi.org/10.1007/BF03399343

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  • DOI: https://doi.org/10.1007/BF03399343

JEL-Classification

  • D31
  • D91
  • H22

Keywords

  • budget incidence analysis
  • redistribution
  • lifetime income smoothing
  • pseudo panel procedure