IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Optimal taxation, social contract, and the four worlds of welfare capitalism

Drawing from the formal setting of the optimal tax theory, the paper identifies the level of Rawlsianism (or aversion to poverty) of the European social planners starting from the observation of real data and redistribution systems and builds a metric that allows measuring the degree of (dis)similarity of the redistribution systems analyzed. The shape of the social welfare function implicit in tax-benefit systems is recovered by inverting the optimal taxation model on actual effective tax rates, assuming that existing systems are optimal for some Mirrleesian social planner. Actual distributions of incomes before and after redistribution are obtained using a European survey on incomes and living conditions of households (EU-SILC 2007). Results are discussed in the light of standard classifications of welfare regimes in Europe. There appears to be a clear coincidence of high decommodification willingness and high Rawlsianism in the Scandinavian, social-democratically influenced welfare states. There is an equally clear coincidence of low decommodification willingness and utilitarianism in the Southern European welfare states. The Continental European countries group closely together in the middle of the scale (except Germany that scores among the highest), as corporatist and etatist. Anglo-Saxon liberal welfare states score close to Continental European countries. Finally the group of Eastern European countries seems to split in two subgroups, one similar to the Continental European countries and one, mostly composed by Baltic countries, with scarce willingness to decommodify citizens, similar to the Southern European model.

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:
Download Restriction: no

Paper provided by Universitat de les Illes Balears, Departament d'Economía Aplicada in its series DEA Working Papers with number 51.

in new window

Date of creation: 2012
Date of revision:
Handle: RePEc:ubi:deawps:51
Contact details of provider: Postal:
Edificio Gaspar Melchor de Jovellanos, Crta. de Valldemossa km 7,5, Palma 07122 (BALEARS)

Web page:

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. Alberto Alesina & George-Marios Angeletos, 2004. "Fairness and Redistribution," NajEcon Working Paper Reviews 122247000000000306,
  2. José M. Labeaga & Xisco Oliver & Amadéo Spadaro, 2005. "Discrete choice models of labour suppluy, behavioural microsimulation and the Spanish tax reform," PSE Working Papers halshs-00590836, HAL.
  3. Herwig Immervoll & Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2007. "Welfare reform in European countries: a microsimulation analysis," Economic Journal, Royal Economic Society, vol. 117(516), pages 1-44, 01.
  4. Immervoll, Herwig & Levy, Horacio & Lietz, Christine & Mantovani, Daniela & O'Donoghue, Cathal & Sutherland, Holly & Verbist, Gerlinde, 2005. "Household Incomes and Redistribution in the European Union: Quantifying the Equalising Properties of Taxes and Benefits," IZA Discussion Papers 1824, Institute for the Study of Labor (IZA).
  5. Amiel, Yoram & Creedy, John & Hurn, Stan, 1999. " Measuring Attitudes towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
  6. Amedeo spadaro, 2003. "Micro-simulation and Normative Policy Evaluation: an Application to some EU Tax-Benefits System," DELTA Working Papers 2003-23, DELTA (Ecole normale supérieure).
  7. François Bourguignon & Amadéo Spadaro, 2008. "Tax-benefit revealed social preferences," PSE Working Papers halshs-00586292, HAL.
  8. Masson, A., 1999. "Economie des solidarités -I- Forces et faiblesses des solidarités comme anti-marché," DELTA Working Papers 1999-17, DELTA (Ecole normale supérieure).
  9. Guy Laroque, 2005. "Income Maintenance and Labor Force Participation," Econometrica, Econometric Society, vol. 73(2), pages 341-376, 03.
  10. Ahmad, Ehtisham & Stern, Nicholas, 1984. "The theory of reform and indian indirect taxes," Journal of Public Economics, Elsevier, vol. 25(3), pages 259-298, December.
  11. Herwig Immervoll, 2003. "The Distribution Of Average And Marginal Effective Tax Rates In European Union Member States," Public Economics 0302005, EconWPA.
  12. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 1039-1073.
  13. CREMER, Helmuth & LOZACHMEUR, Jean-Marie & PESTIEAU, Pierre, 2006. "Social security and retirement decision: a positive and normative approach," CORE Discussion Papers 2006019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Xisco Oliver Rullán & Amedeo Spadaro, 2004. "Are Spanish governments really averse to inequality? a normative analysis using the 1999 Spanish tax reform," Investigaciones Economicas, Fundación SEPI, vol. 28(3), pages 551-566, September.
  15. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  16. Lucy F. Ackert & Jorge Martinez-Vazquez & Mark Rider, 2007. "Social Preferences And Tax Policy Design: Some Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 487-501, 07.
  17. François Bourguignon & Pierre-André Chiappori, 1998. "Fiscalité et redistribution," Revue Française d'Économie, Programme National Persée, vol. 13(1), pages 3-64.
  18. Borsch-Supan, Axel & Reil-Held, Anette, 2001. " How Much Is Transfer and How Much Is Insurance in a Pay-As-You-Go System? The German Case," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 505-24, September.
  19. 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.
  20. Jay S. Coggins & Federico Perali, 2000. "Voting For Equity: Estimating Society'S Preferences Toward Inequality," CHILD Working Papers wp04_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  21. Jean-Yves Duclos, 2000. "Gini Indices and the Redistribution of Income," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(2), pages 141-162, March.
  22. Georges Menahem, 2007. "The decommodified security ratio:A tool for assessing European social protection systems," Post-Print halshs-00198398, HAL.
  23. 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.
  24. Aaberge, R. & Colombino, U. & Strom, S. & Wennemo, T., 1998. "Evaluating alternative tax reforms in Italy with a model of joint labor supply of married couples," Structural Change and Economic Dynamics, Elsevier, vol. 9(4), pages 415-433, December.
  25. Peter Haan & Viktor Steiner, 2004. "Distributional and Fiscal Effects of the German Tax Reform 2000: A Behavioral Microsimulation Analysis," Discussion Papers of DIW Berlin 419, DIW Berlin, German Institute for Economic Research.
  26. André Masson, 2001. "Economie du débat intergénérationnel. Points de vue normatif, comptable, politique," DELTA Working Papers 2001-07, DELTA (Ecole normale supérieure).
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:ubi:deawps:51. 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: (Xisco Oliver)

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.