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Table 4 Breakdown of the redistribution effects before and after the reform based on GE2 and GE−1

From: The effects of China’ s VAT enlargement reform on the income redistribution of urban households

Group

Inequality before tax

RE

 

\(\text {GE}_{\theta }^{x}\)

Weight

Contribution

Before reform

After reform

(1)

(2)

(3)

(4)

(5)

(6)

GE2

G1

0.0394

0.1407

0.0043

−0.0021

−0.0019

G2

0.0043

0.3779

0.0013

−0.0013

−0.0011

G3

0.0036

0.6878

0.0019

−0.0015

−0.0014

G4

0.0049

1.273

0.0048

−0.0013

−0.0012

G5

0.1044

4.2148

0.3377

−0.0035

−0.0031

Between

0.1694

.

0.6501

−0.002

−0.0019

Total

0.2605

.

1

−0.0061

−0.0056

GE−1

G1

0.1078

2.6663

0.227

0.0149

0.0159

G2

0.0044

1.6268

0.0056

−0.002

−0.0017

G3

0.0036

1.2057

0.0034

0.0008

0.0029

G4

0.0049

0.8863

0.0034

−0.0017

−0.0015

G5

0.0566

0.4871

0.0217

−0.0047

−0.0039

Between

0.1873

.

0.7389

−0.0034

−0.0032

Total

0.2535

.

1

0.0028

0.0044

  1. (4)=(2)×(3)×100 %, (9)=(7)×(8)×100 %, where (3) and (8) represent the weights assigned to each group. Assume the average income of the ith group is \(\overline {y_{i}}\), the overall average income is \(\overline {y}\), the ratio of the population of the ith group to the overall population is m i , and the weight is W i , then \(w_{i}=m_{i}\left (\frac {\overline {y_{i}}}{\overline {y}}\right)^{\theta }\)