Template-Type: ReDIF-Paper 1.0
Author-Name: Ravi Kanbur
Author-Name-First: Ravi
Author-Name-Last: Kanbur
Author-Email: sk145@cornell.edu 
Author-Workplace-Name: Cornell University 
Author-Name: Matti Tuomala 
Author-Name-First: Matti
Author-Name-Last: Tuomala
Author-Email: matti.tuomala@tuni.fi
Author-Workplace-Name: Tampere University and Finnish Centre of Excellence in Tax Systems Research (FIT)
Title: How Does Predistribution Affect Redistribution?
Abstract: This paper presents an analysis of the consequences for redistribution policies of achieving a more 
equal predistribution, that is, a more equal distribution of the predetermined income earning 
capabilities that individuals bring to the market. We show that optimal fiscal policies are less 
redistributive when the predistribution is more equal. We then quantify the value of a more equal 
predistribution. We show that total consumption is higher with a more equal predistribution. We 
also develop a money metric measure of social welfare and show that a more equal predistribution 
increases this measure for a Utilitarian and Prioritarian Social Welfare Function but may decrease it 
for the Maximin. 
Length: 28
Creation-Date: 2024-01
Publication-Status: Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research
File-URL: https://verotutkimus.fi/verotutkimus/wp-content/uploads/2024/01/FIT-WP19-Kanbur-Tuomala-Predistibution-190124.pdf
File-Format: Application/pdf
File-Function: Revised version, 2024
Number: 19
Classification-JEL: D31, H21
Keywords: Predistribution, Redistribution, Optimal Non-linear Taxation, Marginal Tax Rates, Social Welfare Function
Handle: RePEc:fit:wpaper:19