American Economic Review Vol. 78 No. 5 1988
The Marginal Efficiency Cost of Redistribution
Abstract
The efficiency effects of redistributive policies are analyzed using a computational general equilibrium model. For parameter values considered most reasonable, a tax-financed universal cash grant generates losses for the higher-income groups that exceed the gains of the lower-income groups by from 50 to 130 percent. These efficiency costs are substantially below those calculated by other authors. The marginal efficiency cost of redistribution through wage subsidies is near zero, and can be negative.
- Volume
- 78
- Issue
- 5
- Pages
- 1019-1033
- Sources
- bibtex:phds-export.bib