Is There Enough Redistribution?
This paper asks whether there are welfare gains from additional redistribution. First, it derives a sufficient condition for the existence of welfare gains from a small increase in lump-sum transfers financed by a uniform increase in labor income t...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/487981489430080235/Is-there-enough-redistribution http://hdl.handle.net/10986/26343 |
| Summary: | This paper asks whether there are
welfare gains from additional redistribution. First, it
derives a sufficient condition for the existence of welfare
gains from a small increase in lump-sum transfers financed
by a uniform increase in labor income taxes. A calibration
suggests that, even under very conservative assumptions,
most countries would benefit from such a scheme. Second, it
asks whether, given existing tax revenues, there are gains
from diverting public funds from government investment
projects toward redistributive programs. The analysis
suggests that the answer is highly sensitive to parameter
values and the rate of return on government investment. |
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