IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Tax-Benefit Systems in Europe and the US: Between Equity and Efficiency

  • Olivier Bargain
  • Mathias Dolls
  • Dirk Neumann
  • Andreas Peichl
  • Sebastian Siegloch

Whether observed differences in redistributive policies across countries are the result of differences in social preferences or efficiency constraints is an important question that paves the debate about the optimality of welfare regimes. To shed new light on this question, we estimate labor supply elasticities on microdata and adopt an inverted optimal tax approach to characterize the redistributive preferences embodied in the welfare systems of 17 EU countries and the US. Implicit social welfare functions are broadly compatible with the fiction of an optimizing Paretian social planner. Some exceptions due to generous demogrant transfers are consistent with the ignorance of behavioral responses by some European governments and are partly corrected by recent policy developments. Heterogeneity in leisure-consumption preferences somewhat affect the international comparison in degrees of revealed inequality aversion, but differences in social preferences are significant only between broad groups of countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-07/cesifo1_wp3534.pdf
Download Restriction: no

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3534.

as
in new window

Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:ces:ceswps:_3534
Contact details of provider: Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.deEmail:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Elena Stancanelli, 2007. "Evaluating the Impact of the French tax credit on the employment rate of women," Sciences Po publications N°2007-33, Sciences Po.
  2. Peter Haan & Katharina Wrohlich, 2007. "Optimal Taxation: The Design of Child Related Cash- and In-Kind-Benefits," SOEPpapers on Multidisciplinary Panel Data Research 65, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 1039-1073, August.
  4. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  5. van Soest, A.H.O. & Das, J.W.M., 2000. "Family Labor Supply and Proposed Tax Reforms in the Netherlands," Discussion Paper 2000-20, Tilburg University, Center for Economic Research.
  6. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Saez, Emmanuel, 2005. "Welfare Reform in European Countries: A Microsimulation Analysis," IZA Discussion Papers 1810, Institute for the Study of Labor (IZA).
  7. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
  8. Bruce D. Meyer & Dan T. Rosenbaum, 1999. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," NBER Working Papers 7363, National Bureau of Economic Research, Inc.
  9. Euwals, Rob & van Soest, Arthur, 1999. "Desired and actual labour supply of unmarried men and women in the Netherlands," Labour Economics, Elsevier, vol. 6(1), pages 95-118, March.
  10. Kleven, Henrik & Kreiner, Claus Thustrup & Saez, Emmanuel, 2006. "The Optimal Income Taxation of Couples," CEPR Discussion Papers 5978, C.E.P.R. Discussion Papers.
  11. John Creedy & Guyonne Kalb, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Melbourne Institute Working Paper Series wp2003n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  12. Ravi Kanbur & Jukka Pirttilä & Matti Tuomala, 2004. "Non-Welfarist Optimal Taxation and Behavioral Public Economics," CESifo Working Paper Series 1291, CESifo Group Munich.
  13. Spadaro, Amedeo, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," EUROMOD Working Papers EM10/08, EUROMOD at the Institute for Social and Economic Research.
  14. Bradley T. Heim, 2009. "Structural Estimation of Family Labor Supply with Taxes: Estimating a Continuous Hours Model Using a Direct Utility Specification," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
  15. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
  16. Hilary Hoynes, 1993. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP," NBER Working Papers 4407, National Bureau of Economic Research, Inc.
  17. Blundell, Richard & Shephard, Andrew, 2011. "Employment, Hours of Work and the Optimal Taxation of Low Income Families," IZA Discussion Papers 5745, Institute for the Study of Labor (IZA).
  18. Olivier Bargain & Amedeo Spadaro, 2008. "Optimal Taxation, Social Contract and the Four Worlds of Welfare Capitalism," Working Papers 200816, School Of Economics, University College Dublin.
  19. Philippe Chone & Guy Laroque, 2001. "Optimal Incentives for Labor Force Participation," Working Papers 2001-26, Centre de Recherche en Economie et Statistique.
  20. Kelly Bishop & Bradley Heim & Kata Mihaly, 2009. "Single Women's Labor Supply Elasticities: Trends and Policy Implications," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(1), pages 146, October.
  21. Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
  22. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  23. Herwig Immervoll, 2007. "Minimum Wages, Minimum Labour Costs and the Tax Treatment of Low-Wage Employment," OECD Social, Employment and Migration Working Papers 46, OECD Publishing.
  24. Sutherland, Holly, 2001. "EUROMOD: an integrated European benefit-tax model: final report," EUROMOD Working Papers EM9/01, EUROMOD at the Institute for Social and Economic Research.
  25. repec:dgr:kubcen:200060 is not listed on IDEAS
  26. Olivier Bargain & Marco Caliendo & Peter Haan & Kristian Orsini, 2010. "“Making work pay” in a rationed labor market," Journal of Population Economics, Springer, vol. 23(1), pages 323-351, January.
  27. Kristian Orsini, 2006. "Is Belgium 'making work pay'?," Center for Economic Studies - Discussion papers ces0605, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  28. Isaksson, Ann-Sofie & Lindskog, Annika, 2009. "Preferences for redistribution--A country comparison of fairness judgements," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 884-902, December.
  29. Bargain, Olivier & Orsini, Kristian & Peichl, Andreas, 2011. "Labor Supply Elasticities in Europe and the US," EUROMOD Working Papers EM1/11, EUROMOD at the Institute for Social and Economic Research.
  30. Tim Callan & Arthur van Soest & John R. Walsh, 2009. "Tax Structure and Female Labour Supply: Evidence from Ireland," LABOUR, CEIS, vol. 23(1), pages 1-35, 03.
  31. Saez, Emmanuel, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 205-29, January.
  32. Vincenzo Atella & Jay S. Coggins & Federico Perali, 2004. "Aversion to Inequality in Italy and its Determinants," CEIS Research Paper 56, Tor Vergata University, CEIS.
  33. Grosfeld, Irena & Senik, Claudia, 2010. "The emerging aversion to inequality - Evidence from subjective data," CEPREMAP Working Papers (Docweb) 1006, CEPREMAP.
  34. Eichhorst, Werner & Konle-Seidl, Regina, 2005. "The interaction of labor market regulation and labor market policies in welfare state reform," IAB Discussion Paper 200519, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  35. James Banks & Richard Disney & Alan Duncan & John Van Reenen, 2005. "The Internationalisation of Public Welfare Policy," Economic Journal, Royal Economic Society, vol. 115(502), pages C62-C81, 03.
  36. Diamond, P., 1980. "Income taxation with fixed hours of work," Journal of Public Economics, Elsevier, vol. 13(1), pages 101-110, February.
  37. Samuel Bentolila & Andrea Ichino, 2008. "Unemployment and consumption near and far away from the Mediterranean," Journal of Population Economics, Springer, vol. 21(2), pages 255-280, April.
  38. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
  39. Robert A. Moffitt & John Karl Scholz, 2009. "Trends in the Level and Distribution of Income Support," NBER Working Papers 15488, National Bureau of Economic Research, Inc.
  40. Heim, Bradley T. & Meyer, Bruce D., 2004. "Work costs and nonconvex preferences in the estimation of labor supply models," Journal of Public Economics, Elsevier, vol. 88(11), pages 2323-2338, September.
  41. Peter Haan & Viktor Steiner, 2005. "Labor Market Effects of the German Tax Reform 2000," Discussion Papers of DIW Berlin 472, DIW Berlin, German Institute for Economic Research.
  42. André DECOSTER & Erik SHCOKKAERT, 1989. "Equity and efficiency of a reform of Belgian indirect taxes," Discussion Papers (REL - Recherches Economiques de Louvain) 1989023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  43. André Decoster & Peter Haan, 2010. "Empirical Welfare Analysis in Random Utility Models of Labour Supply," Discussion Papers of DIW Berlin 1074, DIW Berlin, German Institute for Economic Research.
  44. Senik, Claudia, 2006. "Ambition and Jealousy: Income Interactions in the "Old" Europe versus the "New" Europe and the United States," IZA Discussion Papers 2083, Institute for the Study of Labor (IZA).
  45. repec:dgr:kubcen:200020 is not listed on IDEAS
  46. Boone, Jan & Bovenberg, Lans, 2004. "The optimal taxation of unskilled labor with job search and social assistance," Journal of Public Economics, Elsevier, vol. 88(11), pages 2227-2258, September.
  47. Alesina, Alberto & Giuliano, Paola, 2009. "Preferences for Redistribution," IZA Discussion Papers 4056, Institute for the Study of Labor (IZA).
  48. Laurent Simula & Alain Trannoy, 2006. "Optimal Linear Income Tax when Agents Vote with their Feet," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 393-415, September.
  49. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  50. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Verdelin, Nicolaj, 2009. "An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries," IZA Discussion Papers 3965, Institute for the Study of Labor (IZA).
  51. Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-21, May.
  52. François Bourguignon & Amadéo Spadaro, 2008. "Tax-benefit revealed social preferences," PSE Working Papers halshs-00586292, HAL.
  53. Robert A. Moffitt, 2003. "Means-Tested Transfer Programs in the United States," NBER Books, National Bureau of Economic Research, Inc, number moff03-1, November.
  54. Irena Grosfeld & Claudia Senik, 2010. "The emerging aversion to inequality," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 1-26, 01.
  55. van Soest, A.H.O. & Das, J.W.M., 2000. "Family labor supply and proposed tax reforms in the Netherlands," Other publications TiSEM 57d9aef0-cc35-4fb2-9be2-d, School of Economics and Management.
  56. Nada Eissa & Jeffrey B. Liebman, 1995. "Labor Supply Response to the Earned Income Tax Credit," NBER Working Papers 5158, National Bureau of Economic Research, Inc.
  57. Viktor Steiner & Katharina Wrohlich, 2004. "Work Incentives and Labor Supply Effects of the 'Mini-Jobs Reform' in Germany," Discussion Papers of DIW Berlin 438, DIW Berlin, German Institute for Economic Research.
  58. Bargain, Olivier & Doorley, Karina, 2011. "Caught in the trap? Welfare's disincentive and the labor supply of single men," Journal of Public Economics, Elsevier, vol. 95(9), pages 1096-1110.
  59. Michiel Evers & Ruud Mooij & Daniel Vuuren, 2008. "The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates," De Economist, Springer, vol. 156(1), pages 25-43, March.
  60. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  61. repec:ner:tilbur:urn:nbn:nl:ui:12-121735 is not listed on IDEAS
  62. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
  63. Peter Lambert & Xavier Ramos, 1997. "Horizontal Inequity and Vertical Redistribution," International Tax and Public Finance, Springer, vol. 4(1), pages 25-37, January.
  64. Robert A. Moffitt, 2003. "Introduction to "Means-Tested Transfer Programs in the United States"," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 1-14 National Bureau of Economic Research, Inc.
  65. Amadéo Spadaro, 2008. "Optimal taxation, social contract and the four worlds of welfare capitalism," PSE Working Papers halshs-00586290, HAL.
  66. Richard Blundell & Mike Brewer & Peter Haan & Andrew Shephard, 2009. "Optimal Income Taxation of Lone Mothers: An Empirical Comparison of the UK and Germany," Economic Journal, Royal Economic Society, vol. 119(535), pages F101-F121, 02.
  67. M. Weeks, 2003. "Discrete choice methods with simulation, Kenneth E. Train, Cambridge University Press, 2003, ISBN: 0-521-81696-3, pp. 334," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 379-383.
  68. repec:ner:tilbur:urn:nbn:nl:ui:12-140889 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3534. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.