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Discussion Papers no. 879

The marginal cost of public funds in large welfare state countries

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.

About the publication

Title

The marginal cost of public funds in large welfare state countries

Author

Geir H. M. Bjertnæs

Series and number

Discussion Papers no. 879

Publisher

Statistisk sentralbyrå

Topic

Discussion Papers

ISBN (printed)

1892-753X

Number of pages

26

About Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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