Pareto Weights in Practice: A Quantitative Analysis Across 32 OECD Countries

Bo Hyun Chang (), Youngsung Chang and Sun-Bin Kim

No 662, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: We develop a quantitative heterogeneous-agents general equilibrium model that reproduces the income inequalities of 32 countries in the Organization for Economic Co-operation and Development. Using this model, we compute the optimal income tax progressivity and redistribution for each country under the equal-weight utilitarian social welfare function. A policy reform to adopt the optimal progressivity is supported by the majority of the population. Finally, we uncover the Pareto weights in the social welfare functions of each country that justify the current redistribution policy.

Keywords: Income Inequality; Optimal Tax; Pareto Weights; Political Economy; Redistribution (search for similar items in EconPapers)
Pages: 53 pages
Date: 2017-09
New Economics Papers: this item is included in nep-dge and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Review of Economic Dynamics 28, (April 2018): 181-204

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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:662

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