Is there more redistribution in Scandinavia than in the US?
Are the Scandinavian countries more redistributive than the US? Given the impression of Scandinavian egalitarianism one may conjecture that they redistribute more, but there is not irrefutable support for this in the literature. In general, the relationship between income inequality and redistribution from a cross-country perspective is not settled. Differences in how pre-fisc distributions enter into the measurement contribute to the ambiguity, as does the lack of an agreed redistribution measure; more fundamentally, there is not even an agreed methodology for answering the question. In this paper we re-examine the issue, applying both conventional methodology and the transplant-and-compare approach which renders fiscal regimes into a common base by adjusting for differences in pre-fisc income inequality. Redistributional efforts in the US and three Scandinavian countries, Norway, Sweden and Denmark, are found to depend on the method employed and comparisons vary for different redistribution indices. The US stands out as more tax redistributive than the Scandinavian countries using conventional methodology, but according to the common base approach, US redistributional effort is ranked below that of both Sweden and Denmark for a range of indices. This finding of strong dependence of conclusions upon the methodology adopted is worth emphasizing, since substantial efforts are allocated to the theoretical understanding of different results.
Volume (Year): 32 (2012)
Issue (Month): 3 ()
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