Publication of CEQ Working Paper #16: Comparing the Incidence of Taxes and Social Spending in Brazil and the United States

Announcing the publication of the 16th working paper of the Commitment to Equity Project, by Sean Higgins, Nora Lustig, Whitney Ruble and Timothy Smeeding. Click here to view!


We perform the first comprehensive fiscal incidence analyses in Brazil and the US, including direct cash and food transfers, targeted housing and heating subsidies, public spending on education and health, and personal income, payroll, corporate income, property, and expenditure taxes. In both countries, primary spending is close to 40 percent of GDP. The US achieves higher redistribution through direct taxes and transfers, primarily due to underutilization of the personal income tax in Brazil and the fact that Brazil’s highly progressive cash and food transfer programs are small while larger transfer programs are less progressive. However, when health and non-tertiary education spending are added to income using the government cost approach, the two countries achieve similar levels of redistribution. This result may be a reflection of better-off households in Brazil opting out of public services due to quality concerns rather than a result of government effort to make spending more equitable.

Gates Foundation awards US$580,000 to Nora Lustig to apply the CEQ in Ghana and Tanzania

Nora Lustig –Samuel Z. Stone Professor of Economics, senior associate research fellow at CIPR and nonresident fellow at the Center for Global Development and the Inter-American Dialogue– has been awarded a US$580,000 grant from the Bill & Melinda Gates Foundation to study the impact of fiscal policy on inequality and poverty in low-income countries.

Lustig is co-founder and director of the Commitment to Equity (CEQ)–a project jointly sponsored by CIPR and the Department of Economics at Tulane University and the Inter-American Dialogue–designed to analyze the impact of taxes and social spending on inequality and poverty, and to provide a roadmap for governments, multilateral institutions, and nongovernmental organizations in their efforts to build more equitable societies ( To date, the project has analyzed and compared the incidence of taxation and social spending in twelve Latin American countries, and studies are currently under way in three additional Latin American countries and six countries in other regions of the world.

The grant will enable Lustig and her team to implement the analysis in two pilot countries in Africa, Ghana and Tanzania, as well as to adapt the CEQ methodology to encompass the idiosyncrasies of low-income countries. She will work alongside co-principal investigators James Alm, Chair of the Economics Department, and Sean Higgins, Economics PhD student.

By undertaking a thorough and transparent analysis of who bears the burden of taxation and who receives the benefits of public spending, the project ultimately hopes to foster evidence-based policy discussion and, ideally, implementation of reforms related to taxation, public spending, and social programs in the two countries.


Revised CEQ Handbook is Now Available

This handbook presents a step-by-step guide to applying the incidence analysis used in the multi-country Commitment to Equity project (CEQ). We define the pre- and post-net transfers income
concepts, discuss the methodological assumptions used to construct them, explain how taxes,
subsidies and transfers should be allocated at the household level, and suggestwhat to do when the
information on taxes and transfers is not included in the household survey. We also describe the
indicators that are used to assess the distributive impact, progressivity and effectiveness of social
spending, subsidies and taxes.In addition, we present sample Stata code for producing some of the
indicators. (For more on CEQ visit


Current History presents a new e-book

Inequality on the Rise: A Current History Anthology
Inequality is stirring controversy in developing and advanced economies alike. Perceptions of unfair disparities in incomes and opportunities can undermine the legitimacy of both authoritarian and democratic governments. Yet the problem is more complex than many on the right or left care to admit. Once it reaches certain levels, income inequality impedes economic growth; at other times it seems an unavoidable trade-off in the pursuit of growth. Finding the proper balance is more than a question of economic theory; it’s a moral and political dilemma.

The eight essays collected in this e-book appeared in Current History from 2012 to 2013 in a monthly series on inequality around the world. Together they form a useful guide to the topic that benefits from Current History’s region-by-region approach. Contributors include Uri Dadush and Kemal Derviş, who provide a global overview; Martin King Whyte on China; Daniel Treisman on Russia; Ahmed Galal on the Middle East; Nora Lustig on Latin America; Jason Beckfield on Europe; Roberto Zagha on India; and Luc Christiaensen and Shantayanan Devarajan on Africa. As their essays show, each of the world’s regions has struggled with the economics and politics of income distribution. Yet, as Dadush and Derviş note, “There is no secret to the recipes that governments can use to mitigate inequality.” The key ingredient may be political will.

The BRICS Summit in Durban, South Africa: March 26th – 27th 2013

1. With the theme of ” BRICS and Africa -partnerships for integration and industrialisation” the BRICS Summit will spend a whole day in interaction with NEPAD on African development and BRICS support for African regional integration.

2. A BRICS Bank will be launched, agreed in some detail apparently. Capital will be equal shares of $10bn, much less than original proposal, thus avoiding complex negotiations. South Africa is offering to host it, still under negotiation, which again may avoid complex negotiations on location and recognise Johannesburg as a world class financial market capable of managing international bond issues for the BRICS Bank. The original concept was advanced by India last year, as a direct challenge to the World Bank, and although that dimension has been toned down it is still there. Some people here in South Africa do not see that Africa needs another development bank. Nevertheless the existence of a BRICS Bank will no doubt send a important signal about the role of the BRICS Summit process as a part of the emerging global governance system, and it will give the BRICS clout as highly sought-after co-financers.

3. A currency swap safety net of $240 bn will be concluded, reducing the need for IMF credit lines.

4. A BRICS Business Council with 5 members from each country will be established, developing sectoral programmes and events, including agriculture, to work alongside the BRICS Bank

5. A BRICS Think Tank system was put in place last week at an academic forum in Durban, with the dedicated think tanks from each country signing a joint declaration.

6.The BRICS Trade Union Forum is to be established as a permanent organisation. President Zuma will give the opening address tonight (Saturday 23 March).

7. NEPAD and Oxfam are jointly orgainising a Public Policy Forum ahead of the Summit on Monday 25 March, under the auspices of the African Platform for Development Effectiveness (the African Busan Platform).

8..A CSO “BRICS from Below” counter summit has been formed, positioning itself as a watchdog, which will operate during the next week.

“Commitment to Equity” website is launched

Visit and learn about how taxation and social spending impact inequality and poverty in Latin America.
The Commitment to Equity (CEQ) is a joint project of CIPR and the Department of Economics at Tulane University and the Inter-American Dialogue in Washington, DC. Directed by Nora Lustig and Peter Hakim, the CEQ uses tax and benefit incidence analysis to assess the impact of fiscal policy on inequality, poverty and access to social services. The Commitment to Equity Assessments presented here will prove a useful source for scholars and students. They can also provide a roadmap for governments, multilateral institutions, and nongovernmental organizations in their efforts to build more equitable societies.

Latin America’s Surging Middle Classes: Are they Really a Force for Change?

On Wednesday, November 14th the Center for Global Development will host an event focused on the rise of the Latin American Middle Class.

Event Summary: Latin America’s emerging middle class, defined as those unlikely to fall back into poverty, has grown by 50% in recent years and now includes one of every three people on the continent, roughly equal to the number of people who remain poor. A new World Bank study finds many potential benefits from this surging middle class but cautions that these benefits can only be fully realized if countries can strike a new social contract that links middle class interests to the inclusion of those left behind. The event will include presentation of the report’s key findings and a panel discussion with some of the leading experts on the region’s middle classes.

Click here for a link to the Event page!

World Development publication: Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico

The World Development Journal has published Nora Lustig’s, Luis Lopez-Calva’s, and Eduardo Ortiz-Juarez’s paper “Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico” (September 2012).


During 2000–10, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country

Working Paper 1216: “The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico and Peru: A Synthesis of Results”

Please click here to link to the most recent working paper from Tulane University’s Economics department. Published this month and coauthored with George Gray Molina, Sean Higgins, Wilson Jimenez, Veronica Paz, Claudiney Pereira, Carola Pessino, John Scott, and Ernesto Yanez, Working Paper 1216 estimates the impact direct taxes, indirect takes and subsidies, and social spending on inequality and poverty by applying a standard tax and benet incidence analysis.

Report “Social Protection for Food Security” gets published in July 2012

As part of the reform of the World Committee on Food Security (CFS), the High-level Panel of Experts on Food Security and Nutrition (HLPE) was established in 2010, for providing credible science and knowledge based advice to underpin policy formulation. Nora Lustig was a member of the team who wrote the report on “Social Protection for Food Security.”

To see the report, click here

LASA San Francisco May 26, 2012

On May 26, 2012 I presented a paper at LASA 2012 held in San Francisco: “The Rise and Fall of Income Inequality in Mexico: 1989-2010.”

Abstract: Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the “re-centered influence function” method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-1994) due to institutional factors and labour demand. Returns declined (1994-2006) due to changes in supply and-to a lesser extent-in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.

To download presentation click here.

To download paper click here

Winning the War on Inequality and Poverty in Latin America

On May 15th, Nora Lustig Participated in the “Winning the War on Inequality and Poverty in Latin America” co-hosted by the Inter-American Dialogue and Tulane University. The conference honored Enrique V. Iglesias for his contributions to economic and social advancements in Latin America and the Caribbean. Click here for more information on this conference.

Nora gave a presentation on the results of CEQ, “Taxes, Transfers, Inequality, and Poverty: Argentina, Bolivia, Brazil, and Peru,” click here to download her presentation.

In the photo above, Nora is seated with Robert Zoellick (outgoing World Bank President) during his remarks in honor of Enrique Iglesias.