Accounting for the Distributional Effects of Noncash Public Benefits

This chapter extends previous analyses of the distributional effects of welfare programs in rich countries, focusing on three of the most important public transfers in kind, namely, public education services, public health care services, and public housing. It analyzes their short-term distributional effects in a strictly comparable framework in five EU countries (Belgium, Germany, Greece, Italy, and the UK). The chapter begins by describing the methods of calculating the value of each of the three sources of in-kind benefits and identifying beneficiaries. This is followed by a presentation of the main results of the distributional analysis, showing the effects of the three noncash elements of income in terms of their relative importance in aggregate and across the cash income distribution. Their effects are compared with those of the cash benefits systems, and their overall impact on measures of inequality and poverty are estimated. The next section discusses the welfare interpretation of the empirical findings and outlines an alternative approach using different sets of equivalent scales.