Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity
We study the impacts of investment in public capital on equity and efficiency. Taking into account stylized facts on wealth accumulation, we model agent heterogeneity through differences in saving behavior, income source and time preference. We find that in the long run, public investment is Pareto-...
| Main Authors: | , , , |
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| Format: | Journal article |
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Cambridge University Press
2016
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| _version_ | 1826262411278024704 |
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| author | Klenert, D Mattauch, L Edenhofer, O Lessmann, K |
| author_facet | Klenert, D Mattauch, L Edenhofer, O Lessmann, K |
| author_sort | Klenert, D |
| collection | OXFORD |
| description | We study the impacts of investment in public capital on equity and efficiency. Taking into account stylized facts on wealth accumulation, we model agent heterogeneity through differences in saving behavior, income source and time preference. We find that in the long run, public investment is Pareto-improving and that it reduces inequality in wealth, welfare, and income at the same time, if it is financed by a capital tax. Consumption tax financing is also Pareto-improving but distribution-neutral. Only for labor tax financing, a trade-off between equity and efficiency occurs. Additionally, we find that agents differ in their preferred tax rates.The results for capital and labor tax financing are valid for both, the case of decreasing and constant returns to accumulable factors. |
| first_indexed | 2024-03-06T19:35:46Z |
| format | Journal article |
| id | oxford-uuid:1efbfdd0-37fe-4843-8255-4744d787ae68 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T19:35:46Z |
| publishDate | 2016 |
| publisher | Cambridge University Press |
| record_format | dspace |
| spelling | oxford-uuid:1efbfdd0-37fe-4843-8255-4744d787ae682022-03-26T11:19:25ZInfrastructure and inequality: insights from incorporating key economic facts about household heterogeneityJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:1efbfdd0-37fe-4843-8255-4744d787ae68Symplectic Elements at OxfordCambridge University Press2016Klenert, DMattauch, LEdenhofer, OLessmann, KWe study the impacts of investment in public capital on equity and efficiency. Taking into account stylized facts on wealth accumulation, we model agent heterogeneity through differences in saving behavior, income source and time preference. We find that in the long run, public investment is Pareto-improving and that it reduces inequality in wealth, welfare, and income at the same time, if it is financed by a capital tax. Consumption tax financing is also Pareto-improving but distribution-neutral. Only for labor tax financing, a trade-off between equity and efficiency occurs. Additionally, we find that agents differ in their preferred tax rates.The results for capital and labor tax financing are valid for both, the case of decreasing and constant returns to accumulable factors. |
| spellingShingle | Klenert, D Mattauch, L Edenhofer, O Lessmann, K Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title | Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title_full | Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title_fullStr | Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title_full_unstemmed | Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title_short | Infrastructure and inequality: insights from incorporating key economic facts about household heterogeneity |
| title_sort | infrastructure and inequality insights from incorporating key economic facts about household heterogeneity |
| work_keys_str_mv | AT klenertd infrastructureandinequalityinsightsfromincorporatingkeyeconomicfactsabouthouseholdheterogeneity AT mattauchl infrastructureandinequalityinsightsfromincorporatingkeyeconomicfactsabouthouseholdheterogeneity AT edenhofero infrastructureandinequalityinsightsfromincorporatingkeyeconomicfactsabouthouseholdheterogeneity AT lessmannk infrastructureandinequalityinsightsfromincorporatingkeyeconomicfactsabouthouseholdheterogeneity |