Modeling the Impact of Social Transfers on the Inequality of Income Distribution in Society

Abstract

The impact of social transfers on income inequality in society is analyzed. The role of social transfers in redistributing income and reducing the level of differentiation of society is revealed. The choice of the total income components for all types of social transfers is substantiated. An algorithm for applying the Gini-Taylor coefficient to decompose inequalities by components of total income is constructed. The decomposition of the Gini-Tyla coefficient into components by source of income is performed. Concentration ratios, absolute and relative contributions were calculated for the 11 selected income components based on the total household income of Ukraine in 2018. Ways of improvement of social protection of the population with the purpose of overcoming inequality of distribution of incomes in a society are offered. When modeling the impact of different types of social transfers on income inequality in society, an effective method is to use the decomposition of the Gini coefficient. Similar calculations can be made both in dynamics and in countries, regions, etc. This will allow to analyze the effectiveness of social policy of the state.