The marginal cost of public funds in large welfare state countries
Working paper
Permanent lenke
http://hdl.handle.net/11250/2560733Utgivelsesdato
2018-06-29Metadata
Vis full innførselSamlinger
- Discussion Papers [1002]
Sammendrag
The marginal cost of public funds (MCF) is substantial in generous welfare state countries according to Kleven and Kreiner (2006).
Their main estimate for the Danish economy exceeds 2 mainly because taxation distorts labor force participation. Adjustments in social transfers which alleviate such extensive margin distortions are however not considered. This study shows that MCF within a similar welfare state country, Norway, should be in the interval 1.06- 1.16 when social transfers alleviate such distortions.