Political Preferences for Redistribution in Sweden

41 Pages Posted: 10 Jan 2017

See all articles by Spencer Bastani

Spencer Bastani

IFAU - Institute for Labour Market Policy Evaluation; Linnaeus University - Department of Economics and Statistics; Research Institute of Industrial Economics (IFN)

Jacob Lundberg

Uppsala University

Date Written: December 1, 2016

Abstract

We examine preferences for redistribution inherent in Swedish tax policy 1971–2012 using the inverse optimal tax approach. The income distribution is carefully characterized with the help of administrative register data and we employ behavioral elasticities reflecting the perceived distortionary effects of taxation. The revealed social welfare weights are high for non-workers, small for low-income earners, and hump-shaped around the median. At the top, they are always negative, especially so during the high-tax years of the 1970s and 80s. The weights on non-workers increased sharply in the 1970s fell drastically in the late 80s/early 90s, and have since then increased.

Keywords: redistribution, social welfare weights, optimal taxation, inverse optimal taxation, social preferences

JEL Classification: D630, H210

Suggested Citation

Bastani, Spencer and Lundberg, Jacob, Political Preferences for Redistribution in Sweden (December 1, 2016). CESifo Working Paper Series No. 6205, Available at SSRN: https://ssrn.com/abstract=2896005

Spencer Bastani (Contact Author)

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Linnaeus University - Department of Economics and Statistics ( email )

Växjö, 351 06
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Jacob Lundberg

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

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