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Idiosyncratic Risk in the U.S. and Sweden: Is there a Role for Government Insurance?
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Department of Economics, Stockholm School of Economics.
1998 (English)Report (Other academic)
Abstract [en]

We examine the effects of government redistribution schemes in an economy where agents are subject to uninsurable, individual specific productivity risk. In particular, we consider the trade-off between positive insurance effects and negative distortions on labor supply. We parametize the models by estimating productivity processes on Swedish and U.S. data. The estimation results show that agents in the U.S. are subject to more idiosyncratic risk than agents in Sweden. Distortions are significant but agents, particularly in the U.S., still like some government insruance. As a result of this exercise, we can construct Laffer curves for both countries. These peak when labor income tax rates are around 60 percent.

Place, publisher, year, edition, pages
Stockholm: IIES , 1998. , 36 p.
Series
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 654
Keyword [en]
Idiosyncratic risk, Inequality, Insurance, Redistribution, Laffer curve, Distributions
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-41061OAI: oai:DiVA.org:su-41061DiVA: diva2:328071
Available from: 2010-07-01 Created: 2010-07-01 Last updated: 2010-07-02Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf