BUDGET PERSPECTIVES 2015, PAPER 2. Can We Measure Who Loses Most from Public Service Spending Cuts? June 2014

O’Dea, Cormac and Preston, Ian (2014) BUDGET PERSPECTIVES 2015, PAPER 2. Can We Measure Who Loses Most from Public Service Spending Cuts? June 2014. [Policy Paper]

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Abstract

The fiscal tightening currently under way in Ireland, as in many other countries, comprises cuts to spending on public services (transfers in kind) as well as cuts to benefits and increases in taxation (transfers and charges in cash). Unlike with changes to taxes and cash benefits there is no standard methodology for assessing which groups in society lose most from changes to spending on public services. Therefore distributional analyses of government ‘cash’ decisions are common while those relating to ‘in-kind’ decisions are rare. This paper considers the reasons for this, sets out some issues which must be tackled in modelling the impact of changes to public service spending and discusses some approaches that are being undertaken in other countries. We highlight the fact that such a modelling exercise will yield only imprecise result. Finally, we assess whether it is worth developing a model of the distributional impact of changes to public services in Ireland.

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