number of children attending each level of education. We use SIRUTA<sup>12</sup> level data on enrollment and public spending on primary and secondary schools (see World Bank 2018b), and national-level data for tertiary education. The cost-per-pupil of delivering education service at each level is calculated for urban and rural areas. Since we are unable to identify households in the survey at the SIRUTA-level, the cost-per-pupil is allocated by differentiating between urban and rural areas.

For health services, all individuals have access to services, so we use the cost of insurance approach and assign a per capita benefit equally to all individuals. This is to ensure that sicker individuals are not seen as being “better off”, simply because they use public services more often. We estimate the individual benefit (minimum and basic) based on administrative data on spending for health services taken from the health insurance budget and the number of beneficiaries of basic and minimum packages. The corresponding value is assigned to individuals depending on whether they are beneficiaries of the basic package. The identification of individuals as beneficiaries of the basic or minimum package depends on their relationship with the health insurance system (insured with contribution paid, other categories insured without contribution due, not insured) and the health insurance legislation. To account for the fact that some households may choose to opt-out of public health care, we identify households with positive expenditures on family/general medicine, dental care, and outpatient specialty services and assume that these households relinquish the benefits associated with these services, which are included in the basic service package. For those cases, we reduce the amount of basic-package allocated to that household by the share of public spending on those items.<sup>13</sup> Since the amounts of education and health spending are taken from administrative data, they are scaled down to prevent overestimation bias.<sup>14</sup> There are some important caveats about what is not addressed. First, the analysis does not account for any behavioral, lifecycle or general equilibrium effects and focuses on average incidence rather than incidence at the margin. Our tax shifting and labor supply response assumptions are strong because they imply that consumers have perfectly inelastic demand and that labor supply is perfectly inelastic too. Second, the analysis does not account for the intra-household distribution of consumption. Third, the analysis cannot account for the quality of services delivered by the government. In addition, we are unable to include some important taxes and spending. Corporate profit taxes, VAT paid by government or institutional consumption, and spending on infrastructure investments are excluded, even though the impacts of these may be substantial simply because the methods to assign these taxes and transfers are not robust. Finally, the analysis does not capture the growing debate on how asset accumulation and returns to capital impact income inequality.

> `12` <mark>SIRUTA is the Information System of the Register of Territorial - Administrative Units in Romania, corresponding to LAU 2 classification code.</mark>

> 13 The incidence of spending on health is less pro-poor without this assumption. Alternative estimates excluding this assumption are available upon request.

> 14 For a detailed description of the scaling down procedure, see Higgins and Lustig (2017).

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