Pareto weights in practice: A quantitative analysis across 32 OECD countries

Bo Hyun Chang; Yongsung Chang; Sun Bin Kim

doi:10.1016/j.red.2017.08.002

Pareto weights in practice: A quantitative analysis across 32 OECD countries

Bo Hyun Chang, Yongsung Chang, Sun Bin Kim

Department of Economics

Research output: Contribution to journal › Article › peer-review

14 Citations (Scopus)

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.

Original language	English
Pages (from-to)	181-204
Number of pages	24
Journal	Review of Economic Dynamics
Volume	28
DOIs	https://doi.org/10.1016/j.red.2017.08.002
Publication status	Published - 2018 Apr

Bibliographical note

Funding Information:
We would like to thank Romans Pancs, Mark Bils, Andreas Hornstein, Yena Park, Maxim Troshkin, and seminar participants at Cornell, Connecticut, GRIPS, Kansas City Fed, IMF, Penn State, Richmond Fed, Rochester, Busan University, Korea University, Seoul National University, Yonsei, Bank of Korea, Society for Economic Dynamics (Warsaw) and Midwest Macro Meetings (St. Louis). This work was supported by grants from the National Research Foundation of Korea funded by the Korean Government ( NRF-2016-S1A5A2A03926178 ).

Publisher Copyright:
© 2017 Elsevier Inc.

All Science Journal Classification (ASJC) codes

Economics and Econometrics

Access to Document

10.1016/j.red.2017.08.002

Cite this

@article{1362338d626e4a2bb6531dc0483ec31e,

title = "Pareto weights in practice: A quantitative analysis across 32 OECD countries",

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.",

author = "Chang, {Bo Hyun} and Yongsung Chang and Kim, {Sun Bin}",

note = "Funding Information: We would like to thank Romans Pancs, Mark Bils, Andreas Hornstein, Yena Park, Maxim Troshkin, and seminar participants at Cornell, Connecticut, GRIPS, Kansas City Fed, IMF, Penn State, Richmond Fed, Rochester, Busan University, Korea University, Seoul National University, Yonsei, Bank of Korea, Society for Economic Dynamics (Warsaw) and Midwest Macro Meetings (St. Louis). This work was supported by grants from the National Research Foundation of Korea funded by the Korean Government ( NRF-2016-S1A5A2A03926178 ). Publisher Copyright: {\textcopyright} 2017 Elsevier Inc.",

year = "2018",

month = apr,

doi = "10.1016/j.red.2017.08.002",

language = "English",

volume = "28",

pages = "181--204",

journal = "Review of Economic Dynamics",

issn = "1094-2025",

}

TY - JOUR

T1 - Pareto weights in practice

T2 - A quantitative analysis across 32 OECD countries

AU - Chang, Bo Hyun

AU - Chang, Yongsung

AU - Kim, Sun Bin

N1 - Funding Information: We would like to thank Romans Pancs, Mark Bils, Andreas Hornstein, Yena Park, Maxim Troshkin, and seminar participants at Cornell, Connecticut, GRIPS, Kansas City Fed, IMF, Penn State, Richmond Fed, Rochester, Busan University, Korea University, Seoul National University, Yonsei, Bank of Korea, Society for Economic Dynamics (Warsaw) and Midwest Macro Meetings (St. Louis). This work was supported by grants from the National Research Foundation of Korea funded by the Korean Government ( NRF-2016-S1A5A2A03926178 ). Publisher Copyright: © 2017 Elsevier Inc.

PY - 2018/4

Y1 - 2018/4

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=85029187536&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85029187536&partnerID=8YFLogxK

U2 - 10.1016/j.red.2017.08.002

DO - 10.1016/j.red.2017.08.002

M3 - Article

AN - SCOPUS:85029187536

SN - 1094-2025

VL - 28

SP - 181

EP - 204

JO - Review of Economic Dynamics

JF - Review of Economic Dynamics

ER -

Pareto weights in practice: A quantitative analysis across 32 OECD countries

Abstract

Bibliographical note

All Science Journal Classification (ASJC) codes

Access to Document

Other files and links

Fingerprint

Cite this