Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Abstract: This paper presents a new simple heuristic method of calculating revealed welfare weights for different income groups in Denmark. The welfare weights are estimated under the assumption that the existing Danish tax- and welfare system is optimal. The method is based on a model in Social Marginal Cost of Public Funds thory, which both incorporate hours-of-work, labour supply - and participation responses. The revealed welfare weights compare to objective standard criteria for acceptable wights; (1) decreasing in income and (2) non negative. The calculation of the Danish weights shows that the presence of positive participation responses, the middle income groups have the largest priority at the expense of the other income groups (the welfare weights profile in inverse U-shaped). Furthermore the results showed that in different cases the welfare wights for the high-income groups become negative. Thus, the results contradict the two objective criteria for reasonable social preferences - or it contribute to create uncertainty about the optimality of the Danish tax-system.

Keywords: velfærd; indkomstgrupper

JEL-codes: A10

Language: Danish

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