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Redistribution and the marginal Cost of Public Funds

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  • Sandmo, A.

Abstract

Discussion of the marginal cost of public funds with distortionary taxation are often cast in the framework of a one-consumer economy, while the main justification of distortionay taxes is that they are needed for distribution. This paper analyzes the issue in a model with heterogeneous consumers and a linear income tax, focusing on the tradeoff between labour market distortions and the redistribution from high-wage to low-wage workers.

Suggested Citation

  • Sandmo, A., 1997. "Redistribution and the marginal Cost of Public Funds," Papers 8/97, Norwegian School of Economics and Business Administration-.
    • Handle: RePEc:fth:norgee:8/97
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    References listed on IDEAS

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    More about this item

    Keywords

    FISCAL POLICY ; PUBLIC GOODS;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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