A Common Base Answer to the Question “Which Country is Most Redistributive?”

Abstract

We believe that what most authors have in mind when referring to the “most redistributive country” is a tax/transfer schedule that is most redistributive across all pre‐tax/transfer income distributions. To measure each country's tax and transfers redistribution according to the same baseline, this paper suggests using the transplant‐and‐compare method of Dardanoni and Lambert (2002) to establish a common base. The redistributive effects of countries’ tax and transfer schedules are illustrated by employing micro data on eight countries from Luxembourg Income Study (LIS). Of the eight, Finland is found to be the most redistributive country according to the common base method