Addressing Inequality in Budgeting
Lessons from Recent Country Experience
In many countries, public expenditure, including transfers, plays a major role in reducing income inequality. The report reviews the various ways that budgeting can be used to this end. A first includes taking a broad approach to results-based budgeting, taking social and distributional goals into consideration. A second relies on integrating distributional impact analysis directly into the budget process. The report discusses the concrete experience of eight OECD countries in this area, analysing how they are integrating distributional impact assessment in spending and budgeting decisions. Finally, it discusses the tools, frameworks and data that are needed to take distributional considerations into account as part of evidence-informed policy making.
The case of France
This case study reviews how distributional implications related to equality are integrated into budgeting processes and inform budgetary decisions in France. It discusses the practices currently in place, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level through a range of microsimulation models and data sources. As highlighted in this case study, the field of distributional impact analysis in France is marked by a variety of actors and tools. This variety allows for the transparent comparison of results, which remarkably tend to converge despite different methodological approaches. While additional efforts are necessary to ensure the comparability of outputs and their systematic inclusion in the budget cycle, this robustness lends credibility to the public debate around distributional impacts and how they affect inequality in France.
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