Redistribution is a government policy, reducing inequality, through a tax and transfer.
Jorge Martinez-Vazquez 12, et al, Professor of Economics (The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries, International Center for Public Policy Working Paper 12-25)
Income inequality is measured here by the Gini coefficient, although of course inequality has many other dimensions. 17 The term “redistribution” is used to mean a reduction in income inequality as measured by the Gini coefficients as the result of government policies controlling for other factors that typically have been identified in the past literature as significant determinants of income distribution. On the side of government policies we consider all direct and indirect taxes, 18 as well as a variety of government expenditures beyond social welfare expenditures.19 We take a long run view of how tax and expenditure policies may have affected income distribution over a continuum of 30 + years. . Using a multi-country study can be criticized because even though income distribution is affected by a set of common factors across countries, there are many institutions and processes that are particular to each country that cannot be reflected in the variables used in the regression. However, this issue is minimized because in our estimation technique we control for those fixed country effects.