Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192861 
Year of Publication: 
2018
Series/Report no.: 
Discussion Papers No. 879
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
The marginal cost of public funds (MCF) is substantial in generous welfare state countries according to Kleven and Kreiner (2006). Their main estimate for the Danish economy exceeds 2 mainly because taxation distorts labor force participation. Adjustments in social transfers which alleviate such extensive margin distortions are however not considered. This study shows that MCF within a similar welfare state country, Norway, should be in the interval 1.06 - 1.16 when social transfers alleviate such distortions.
Subjects: 
Marginal cost of public funds
Optimal income taxation
Social security transfers
tagging
JEL: 
H21
H23
H41
Document Type: 
Working Paper

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