Optimal Income Redistribution by Árpád Ábrahám

Join us for this weeks Macroeconomics Research Seminar, Autumn Term 2024.

Árpád Ábrahám, from the School of Economics, University of Bristol,will present this weeks Macroeconomics seminar on Optimal Income Redistribution.

Abstract

We study the optimal mix of the income tax-and-transfer system and social security in a rich quantitative model. A Ramsey planner jointly chooses the pension generosity and progressivity as well as the income tax progressivity by maximizing the welfare of either currently alive generations or the labor-market entrants in the final steady state, potentially subject to constraints that limit the amount of inter- and/or intra-generational redistribution. If redistribution is not limited, the optimal pension system calls for a decrease in pension progressivity, which reduces aggregate distortions, but the optimal mix of the other two components strongly depends on the policymaker's inter-generational welfare weight. We also find that, regardless of the inter- or intra-generational redistribution constraints, we can always find reforms that deliver Pareto improvements across generations or across income types, with considerably higher welfare gains than reforms that only optimize over income tax progressivity.

This seminar will be held on campus in 5B.307 at 1.30pm on Tuesday, 3 December 2024. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.