Reference : Evidence on the Insurance Effect of Redistributive Taxation |
Scientific journals : Article | |||
Business & economic sciences : Economic systems & public economics | |||
http://hdl.handle.net/10993/8530 | |||
Evidence on the Insurance Effect of Redistributive Taxation | |
English | |
Koulovatianos, Christos ![]() | |
Grant, Charles [University of Reading] | |
Michaelides, Alexander [London School of Economics and CEPR] | |
Padula, Mario [University \Ca' Foscari" of Venice and CSEF] | |
2010 | |
Review of Economics and Statistics | |
MIT Press | |
92 | |
1 | |
965-973 | |
Yes (verified by ORBilu) | |
International | |
0034-6535 | |
1530-9142 | |
[en] Undiversi¯able Earnings Risk ; Consumption Insurance, ; Tax Distortions | |
[en] If households face uninsurable idiosyncratic earnings risk, theory predicts that re-
distributive tax and transfer systems have both an insurance and a distortionary e®ect. Exploiting the substantial variation of tax and transfer systems across US states and over time we investigate the necessary traces of these two effects in the data: that state-level measures of redistributive taxation should correlate negatively with, (a) the standard deviation, and (b) the mean, of the within-state consumption distribution. We find that the first correlation is robust, supporting strongly the presence of an insurance effect. The distortionary effect can also be detected in the data but it is less precisely estimated. | |
http://hdl.handle.net/10993/8530 | |
10.1162/REST_a_00040 | |
http://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00040?journalCode=rest |
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