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A large scale OLG model for the analysis of the redistributive effects of policy reforms

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  • Bucciol, Alessandro
  • Cavalli, Laura
  • Fedotenkov, Igor
  • Pertile, Paolo
  • Polin, Veronica
  • Sartor, Nicola
  • Sommacal, Alessandro

Abstract

The paper presents a large scale overlapping generation model with heterogeneous agents, where the household is the decision unit. We calibrate the model for three European countries – France, Italy and Sweden – which show marked differences in the design of some public programmes. We examine the properties in terms of annual and life cycle redistribution of a number of tax-benefit programmes, by studying the impact of removing from our model economies some or all of them. We find that whether one considers a life cycle or an annual horizon, and whether behavioural responses are accounted for or not, has a large impact on the results. The model may provide useful insights for policy makers on which kind of reforms are more likely to achieve specific equity objectives.

Suggested Citation

  • Bucciol, Alessandro & Cavalli, Laura & Fedotenkov, Igor & Pertile, Paolo & Polin, Veronica & Sartor, Nicola & Sommacal, Alessandro, 2017. "A large scale OLG model for the analysis of the redistributive effects of policy reforms," European Journal of Political Economy, Elsevier, vol. 48(C), pages 104-127.
  • Handle: RePEc:eee:poleco:v:48:y:2017:i:c:p:104-127
    DOI: 10.1016/j.ejpoleco.2016.08.005
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    3. Fedotenkov, Igor, 2018. "Corruption vs reforms: Why do voters prefer the former?," MPRA Paper 89581, University Library of Munich, Germany.
    4. Alessandro Milazzo & Elena Vigna, 2018. "“The Italian Pension Gap: a Stochastic Optimal Control Approach"," CeRP Working Papers 179, Center for Research on Pensions and Welfare Policies, Turin (Italy).
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    6. Benxi Lin & Zongjian Lin & Yu Yvette Zhang & Weiping Liu, 2018. "The Impact of the New Rural Pension Scheme on Retirement Sustainability in China: Evidence of Regional Differences in Formal and Informal Labor Supply," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-7, November.
    7. Martino Tasso, 2020. "Do details matter? An analysis of Italian personal income tax," Temi di discussione (Economic working papers) 1301, Bank of Italy, Economic Research and International Relations Area.
    8. Lanying Sun & Changhao Su & Xinghui Xian, 2020. "Assessing the Sustainability of China’s Basic Pension Funding for Urban and Rural Residents," Sustainability, MDPI, Open Access Journal, vol. 12(7), pages 1-17, April.
    9. Kichan Yoon & Gyubeom Park & Munjae Lee, 2020. "Priority Analysis of Right Remedies of Basic Living Recipients in Korea," Sustainability, MDPI, Open Access Journal, vol. 12(6), pages 1-9, March.
    10. Julio López Laborda & Carmen Marín González & Jorge Onrubia, 2020. "Observatorio sobre el reparto de los impuestos y las prestaciones entre los hogares españoles. Quinto informe – Sanidad y educación, 2013 - 2017," Studies on the Spanish Economy eee2020-28, FEDEA.
    11. Ming Zhang & Xiaorong Zou & Long Sha, 2019. "Social Security and Sustainable Economic Growth: Based on the Perspective of Human Capital," Sustainability, MDPI, Open Access Journal, vol. 11(3), pages 1-14, January.

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    More about this item

    Keywords

    Redistribution; Fiscal policy; Computable OLG models;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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