Predistribution

Predistribution is a policy approach that aims to influence how income and wealth are distributed before taxes and transfers are applied. It focuses on shaping market outcomes and social structures that determine earnings, rather than relying primarily on post-tax, post-transfer redistribution.

Proponents argue that predistribution can improve equality of opportunity and reduce the need for extensive welfare spending by addressing the underlying determinants of inequality, such as wage levels, job types, skill formation, bargaining power, and market concentration.

Policy tools associated with predistribution include strengthening labor markets (for example, living wages, support for collective bargaining, and labor rights), promoting competition to reduce seller power, expanding access to quality education and skills training, and improving social infrastructure such as childcare, housing, and healthcare. Taxation and transfers remain part of the overall framework, but predistribution concentrates on the factors that determine earnings before any redistributive steps.

Critics caution that disentangling predistribution effects from traditional redistribution is difficult, that measures may have unintended consequences for growth or innovation, and that political economy constraints can limit implementation. Empirical evidence on the effectiveness of predistribution policies is mixed across countries and contexts.

Predistribution is often discussed as a complement to redistribution rather than a substitute, with emphasis on long-term structural change rather than short-term income transfers alone.