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A Decade of Tax and Benefit Reforms in Sweden: Effects on Labour Supply, Welfare and Inequality

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  • Aronsson, Thomas
  • Palme, Marten

Abstract

Sweden has experienced a sequence of tax and benefit reforms during the last decade. In this paper, the authors evaluate these reforms from labor supply, welfare, and inequality points of view. They depart from a household labor supply model. Simulation of the model reveals that tax and benefit reforms have led to a considerable reduction of the excess burden. Regarding social welfare and inequality, the authors show that the results depend to a large extent on the income inequality measure and the measure of social welfare as well as the income concept (household disposable income or money metric utility). Copyright 1998 by The London School of Economics and Political Science

Suggested Citation

  • Aronsson, Thomas & Palme, Marten, 1998. "A Decade of Tax and Benefit Reforms in Sweden: Effects on Labour Supply, Welfare and Inequality," Economica, London School of Economics and Political Science, vol. 65(257), pages 39-67, February.
  • Handle: RePEc:bla:econom:v:65:y:1998:i:257:p:39-67
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    Cited by:

    1. Thor O. Thoresen & Zhiyang Jia & Peter J. Lambert, 2013. "Distributional benchmarking in tax policy evaluations," Discussion Papers 765, Statistics Norway, Research Department.
    2. Tom Kornstad & Thor O. Thoresen, 2006. "Effects of family policy reforms in Norway: results from a joint labour supply and childcare choice microsimulation analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 27(3), pages 339-371, August.
    3. Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labor Supply When Tax Avoidance Matters," Working Paper Series 157, Trade Union Institute for Economic Research.
    4. Blomquist, Soren & Eklof, Matias & Newey, Whitney, 2001. "Tax reform evaluation using non-parametric methods: Sweden 1980-1991," Journal of Public Economics, Elsevier, vol. 79(3), pages 543-568, March.
    5. Martin Floden & Jesper Lindé, 2001. "Idiosyncratic Risk in the United States and Sweden: Is There a Role for Government Insurance?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 406-437, July.
    6. Liang, Che-Yuan, 2012. "Nonparametric structural estimation of labor supply in the presence of censoring," Journal of Public Economics, Elsevier, vol. 96(1), pages 89-103.
    7. Thomas Aronsson & James R. Walker, 2010. "Labor Supply, Tax Base and Public Policy in Sweden," NBER Chapters,in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 127-158 National Bureau of Economic Research, Inc.
    8. Thomas Aronsson & James R. Walker, 1997. "The Effects of Sweden's Welfare State on Labor Supply Incentives," NBER Chapters,in: The Welfare State in Transition: Reforming the Swedish Model, pages 203-266 National Bureau of Economic Research, Inc.
    9. Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labour Supply Prediction When Tax Avoidance Matters," Seminar Papers 679, Stockholm University, Institute for International Economic Studies.
    10. Agell, Jonas & Persson, Mats & Sacklen, Hans, 2004. "The effects of tax reform on labor supply, tax revenue and welfare when tax avoidance matters," European Journal of Political Economy, Elsevier, vol. 20(4), pages 963-982, November.
    11. Johan Willner & Lena Granqvist, 2002. "The Impact on Efficiency and Distribution of a Base-Broadening and Rate-Reducing Tax Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(3), pages 273-294, May.
    12. Simon Georges-Kot & Dominique Goux & Eric Maurin, 2017. "Following the Crowd: Leisure Complementarities beyond the Household," Journal of Labor Economics, University of Chicago Press, vol. 35(4), pages 1061-1088.
    13. Soren Blomquist & Whitney Newey, 2002. "Nonparametric Estimation with Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 70(6), pages 2455-2480, November.
    14. Witterblad, Mikael, 2008. "The Demand for Local Public Services in Sweden," Umeå Economic Studies 730, Umeå University, Department of Economics.
    15. Witterblad, Mikael, 2008. "Essays on Redistribution and Local Public Expenditures," Umeå Economic Studies 731, Umeå University, Department of Economics.
    16. Åsa Hansson, 2007. "Taxpayers' responsiveness to tax rate changes and implications for the cost of taxation in Sweden," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(5), pages 563-582, October.
    17. Blomquist, Sören & Newey, Whitney, 1997. "Nonparametric Estimation of Labor Supply Functions Generated by Piece Wise Linear Budget Constraints," Working Paper Series 1997:24, Uppsala University, Department of Economics.

    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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