European Union Budget Contributions and Expenditures: A Lorenz Curve Approach



Loek Groot

Utrecht University School of Economics (USE)

PO Box 80.125

3508 TC Utrecht

The Netherlands



This article investigates the (in)equality of the European budget with respect to financial contributions and expenditures across Member States. Standard tools from the measurement of income inequality, including the Lorenz curve and the Gini coefficient, are applied to the distribution of European Union contributions and expenditure. In addition, the inequality in the allocation of the budget is juxtaposed against the distribution of voting power within the Council of Ministers. Redistribution from rich to poor members can mainly be attributed to unequal per capita contributions in funding the EU budget, while voting power rather than the needs of individual members dominates with respect to expenditure. The accession to the EU of relatively smaller eastern European countries in 2004 and 2007 delivered more voting power to poorer countries with relatively small population shares. This change reinforced the voting power effect in expenditures.