Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5067778 | European Journal of Political Economy | 2017 | 24 Pages |
â¢We calibrate an OLG model with heterogeneous agents for France, Italy and Sweden.â¢We include the main tax and benefit programmes to study income redistribution.â¢Life cycle redistribution is always substantially lower than annual redistribution.â¢Annual (life cycle) redistribution is the highest in Sweden (Italy).â¢France redistributes less, mainly due to lower revenue from personal income tax.
The paper presents a large scale overlapping generation model with heterogeneous agents, where the household is the decision unit. We calibrate the model for three European countries - France, Italy and Sweden - which show marked differences in the design of some public programmes. We examine the properties in terms of annual and life cycle redistribution of a number of tax-benefit programmes, by studying the impact of removing from our model economies some or all of them. We find that whether one considers a life cycle or an annual horizon, and whether behavioural responses are accounted for or not, has a large impact on the results. The model may provide useful insights for policy makers on which kind of reforms are more likely to achieve specific equity objectives.