A Decade of Tax and Benefit Reforms in Sweden: Effects on Labour Supply, Welfare and Inequality

In: Economica, Volume 65, Issue 257, p. 39-67

Abstract

Sweden has experienced a sequence of tax and benefit reforms during the last decade. In this paper we evaluate these reforms from labour supply, welfare and inequality points of view. We depart from a household labour supply model. Simulation of the model reveals that tax and benefit reforms have led to a considerable reduction of the excess burden. Regarding social welfare and inequality, we show that the results depend to a large extent on the income inequality measure and the measure of social welfare, as well as the income concept (household disposable income or money metric utility).