Parametric estimation of income distribution in Norway and their relationship to taxation in a macroeconomic perspective

Boyd Oyier, OFS scholarship recipient 2016

Abstract

Parametric methods present a number of advantages in describing the size distribution of income. Among them fitting income data with few or missing observations.
In this thesis, I analyze the contribution of taxation to the changes in posttax income
distribution using the parametric approach on individual income data. I find that
the Singh-Maddala distribution fits the data best. I show how parametric methods
can be combined with modern econometric methods by using the shape parameters
of the Singh-Maddala distribution as dependent variables in time series and Feasible
Generalized Least Squares regressions. The model uses inflation rate as the control macroeconomic variable. Results reveal that the tax on capital has significant
positive redistributive effects.

 

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Published Sep. 1, 2020 1:57 PM - Last modified Sep. 1, 2020 1:57 PM