Efficient redistribution of lifetime income through welfare acccounts

A. Lans Bovenberg; Martin Ino Hansen; Peter Birch Sørensen

doi:10.1111/j.1475-5890.2012.00151.x

Efficient redistribution of lifetime income through welfare acccounts

A. Lans Bovenberg, Martin Ino Hansen, Peter Birch Sørensen

Økonomisk Institut

1 Citationer (Scopus)

Abstract

Compared with a conventional tax-transfer system, individual welfare accounts can redistribute lifetime incomes at a lower efficiency cost. These welfare accounts employ mandatory contributions rather than taxes to finance social transfers to people of working age. We describe a design for welfare accounts that guarantees a Pareto improvement if behavioural responses to the accounts improve the public budget. We also develop a formula for quantifying the impact of welfare accounts on the government budget and economic efficiency. Applying the formula to Danish data, we find that the proposed welfare accounts would generate a Pareto improvement, thus improving the trade-off between equity and efficiency. We discuss how the gains from welfare accounts can be distributed in an equitable manner.

Originalsprog	Engelsk
Tidsskrift	Fiscal Studies
Vol/bind	33
Udgave nummer	1
Sider (fra-til)	1-37
Antal sider	37
ISSN	0143-5671
DOI	https://doi.org/10.1111/j.1475-5890.2012.00151.x
Status	Udgivet - mar. 2012

Emneord

Det Samfundsvidenskabelige Fakultet
social insurance
welfare accounts
lifetime income distribution

Adgang til dokumentet

10.1111/j.1475-5890.2012.00151.x

Citationsformater

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keywords = "Faculty of Social Sciences, social insurance, welfare accounts, lifetime income distribution",

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AU - Bovenberg, A. Lans

AU - Hansen, Martin Ino

AU - Sørensen, Peter Birch

N1 - JEL Classification: H53;H55

PY - 2012/3

Y1 - 2012/3

N2 - Compared with a conventional tax-transfer system, individual welfare accounts can redistribute lifetime incomes at a lower efficiency cost. These welfare accounts employ mandatory contributions rather than taxes to finance social transfers to people of working age. We describe a design for welfare accounts that guarantees a Pareto improvement if behavioural responses to the accounts improve the public budget. We also develop a formula for quantifying the impact of welfare accounts on the government budget and economic efficiency. Applying the formula to Danish data, we find that the proposed welfare accounts would generate a Pareto improvement, thus improving the trade-off between equity and efficiency. We discuss how the gains from welfare accounts can be distributed in an equitable manner.

AB - Compared with a conventional tax-transfer system, individual welfare accounts can redistribute lifetime incomes at a lower efficiency cost. These welfare accounts employ mandatory contributions rather than taxes to finance social transfers to people of working age. We describe a design for welfare accounts that guarantees a Pareto improvement if behavioural responses to the accounts improve the public budget. We also develop a formula for quantifying the impact of welfare accounts on the government budget and economic efficiency. Applying the formula to Danish data, we find that the proposed welfare accounts would generate a Pareto improvement, thus improving the trade-off between equity and efficiency. We discuss how the gains from welfare accounts can be distributed in an equitable manner.

KW - Faculty of Social Sciences

KW - social insurance

KW - welfare accounts

KW - lifetime income distribution

U2 - 10.1111/j.1475-5890.2012.00151.x

DO - 10.1111/j.1475-5890.2012.00151.x

M3 - Journal article

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VL - 33

SP - 1

EP - 37

JO - Fiscal Studies

JF - Fiscal Studies

IS - 1

ER -

Efficient redistribution of lifetime income through welfare acccounts

Abstract

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