Increasing inequalities have received strong attention as part of policy debates in recent years, prompting many countries to pay greater attention to the redistributive implications of their policy choices. In public finances, the conversation surrounding inequality usually focuses on redistribution through a taxation angle. However, the redistributive impact of public expenditure in reducing inequality is even greater than that of taxation. Going some way to recognising this, many countries have increased their focus on the redistributive impact of public spending. Given this increased interest, this report aims to shed light on how evidence related to distributional issues can be integrated into policy making through the budget process. This area has seen many innovative practices emerge in recent years. Countries have been developing results-based budgeting approaches that can help integrate broader social and distributional goals into the budget process. Many have also introduced distributional impact analysis as part of the budget formulation process.

Recent years have seen countries increasingly use their budgeting frameworks to achieve broader social and economic outcomes. Such cross-cutting challenges affecting various groups in society mean that an understanding of the underlying distributive implications of budgets is critical to ensuring that expenditure can be targeted and mobilised in the most effective way to achieve economic and social goals simultaneously in a context of severe fiscal constraints.

This chapter provides an overview of the how the eight countries included in this project use results-based budgeting frameworks to address issues of inequality. It first highlights the rationale for addressing inequality in spending decisions, before looking at what tools and methods are available for countries to do so. It then discusses the practices currently in place in the countries, how they are set up in the countries’ budgeting frameworks, and how they are supported at the technical level, through the range of models and data tools that are utilised in policy practice.

This case study provides an overview of recent trends in income inequality in Canada, and discusses how considerations for inequality and distributional implications of public expenditure are brought to bear as part of the budget process. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models, and data tools that are utilised in policy practice.

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.

Ireland benefits from a strong and high-level commitment to integrate equality and its different dimensions into budgetary processes. These efforts are articulated under the “Equality Budgeting” initiative, which has been progressively implemented across the government since 2018. As part of this initiative and the country’s wider performance framework, the distributional impacts of budgetary and welfare measures are analysed to inform budgetary decisions. Government departments are also responsible for setting equality-related goals and relevant performance targets. An advisory group steers the development of the initiative, while the technical capacity to support its implementation is provided by an interdepartmental network of experts. Distributional analyses are underpinned by Ireland’s tax-benefit microsimulation model, which is developed and maintained independently. Overall, Ireland’s case therefore provides an example of a robust institutional framework for the routine consideration of equality in the budget cycle.

This case study provides an overview of recent trends in income inequality in Italy, and discusses how considerations for inequality and distributional implications of public expenditure are brought to bear as part of the budget process. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models, and data tools that are utilised in policy practice.

This case study provides an overview of recent trends in income inequality in Korea, and discusses how considerations for inequality and distributional implications of public expenditure are brought to bear as part of the budget process. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models, and data tools that are utilised in policy practice.

This case study provides an overview of recent trends in income inequality in the Netherlands, and discusses how considerations for inequality and distributional implications of public expenditure are brought to bear as part of the budget process. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models and data tools that are utilised in policy practice.

This case study provides an overview of recent trends in income inequality in New Zealand and discusses how distributional analysis is considered within government as part of the budget process, as well as how the various frameworks of different organisations within government consider distributional issues. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models, and data tools that are utilised in policy practice.

This case study provides an overview of recent trends in income inequality in Sweden, and discusses how considerations for inequality and distributional implications of public expenditure are brought to bear as part of the budget process. It discusses the practices currently in place in the country, how they are set up in the country’s public expenditure frameworks, and how they are supported at the technical level, through the range of models and data tools that are utilised in policy practice.