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

AuthorThor O. Thoresen, Runa Nesbakken, Peter J. Lambert
DOIhttp://doi.org/10.1111/sjoe.12366
Publication Date01 Oct 2020
Scand. J. of Economics 122(4), 1467–1479, 2020
DOI: 10.1111/sjoe.12366
A Common Base Answer to the Question
“Which Country Is Most Redistributive?”*
Peter J. Lambert
University of Oregon, Eugene, OR 97403-1285, USA
plambert@uoregon.edu
Runa Nesbakken
Statistics Norway,NO-0131 Oslo, Norway
runa.nesbakken@ssb.no
Thor O. Thoresen
Statistics Norway,NO-0131 Oslo, Norway
thor.olav.thoresen@ssb.no
Abstract
We believe that what most authors have in mind when referring to the “most redistributive
country” is a tax and transfer schedule that is most redistributive across all pre-tax and transfer
income distributions. In order to measure each country’stax and transfer redistribution according
to the same baseline, we suggest using the transplant-and-compare method of Dardanoni and
Lambert (2002, Journal of Public Economics 86, 99–122) to establish a common base. The
redistributive effects of countries’ tax and transfer schedules are illustrated by employing
microdata on eight countries from the LuxembourgIncome Study (LIS). Of these eight countries,
Finland is found to be the most redistributive country,according to the common base method.
Keywords: Common base; cross-country comparison; personal income tax; redistributional
effect
JEL classification:H11; H23
I. Introduction
Growing concern about rising income inequality around the world raises
the question of how capable the tax and transfer schedule is for reducing
inequality. In the literature, we find different hypotheses about the
relationship between initial income and tax. One of these is the median voter
*This work was supported by the Norwegian Research Council, Grant 187403.We are grateful
to the Luxembourg Income Study (LIS; http://www.lisdatacenter.org) for making cross-country
income and tax data available, and to B˚ard Lian and Andrea Papini, who haveassisted with the
work to obtain empirical illustrations.We also thank two anonymous referees for their comments
on an earlier version of the paper.
Also affiliated with Oslo Fiscal Studies (Department of Economics, University of Oslo).
C
The editors of The Scandinavian Journal of Economics 2019.

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