The Redistributive Aspects of ELIE: a simulation approach

Ce papier analyse les problèmes liés à l’implémentation du schéma Equal Labour Income Equalisation (ELIE) proposé par Kolm (2005). Il étudie successivement l’influence de l’incertitude dans la connaisance des revenus indivduels, l’impact des échelles d’équivalence et finalement les conséquences de l’accumulation du capital. Si l’incertitude ne modifie pas fondamentalement les propriétés d’équité de ELIE, les échelles d’équivalences peuvent avoir des cosnéquences non triviales en fonction de la relation entre fertilité et revenu. Enfin, l’accumulation du capital introduit de fortes inégalités dans la taxation. Le papier repose sur des simulations calibrées de la distribution des revenus en France et sur l’utilisation des divers indices de taxation. Abstract This paper analyses the problems linked to the implementation of the Equal Labour Income Equalisation (ELIE) scheme proposed by Kolm (2005). It successively studies the influence of uncertainty in the knowledge of individual incomes, the impact of equivalence scales and finally the consequences of capital accumulation. If uncertainty does not modify fundamentally the equity properties of ELIE, equivalence scales can have non trivial consequences depending on the relation between income and fertility. Finally, capital accumulation introduces strong inequalities in taxation. The paper relies on simulations of the income distribution, calibrated on French data and on the use of taxation indices.This paper analyses the problems linked to the implementation of the Equal Labour Income Equalisation (ELIE) scheme proposed by Kolm (2005). It successively studies the influence of uncertainty in the knowledge of individual incomes, the impact of equivalence scales and finally the consequences of capital accumulation. If uncertainty does not modify fundamentally the equity properties of ELIE, equivalence scales can have non trivial consequences depending on the relation between income and fertility. Finally, capital accumulation introduces strong inequalities in taxation. The paper relies on simulations of the income distribution, calibrated on French data and on the use of taxation indices. JEL Classification : C15, D63, D78, H21. GREQAM, CNRS, Centre de la Vieille Charité, 2 rue de la Charité, 13002 Marseille, email:[email protected] This paper is a revised version of the paper given in Marseilles for the workshop on Macrojustice organised by IDEP around Serge-Christophe Kolm in April 2006. The author thanks all the participants for their comments and especially Serge-Christophe Kolm. Later comments by David de la Croix, Kaddour Hadri, Claude Gamel and Nicolas Gravel greatly improved the paper. Usual disclaimers apply. 1 ha ls hs -0 03 47 27 8, v er si on 1 15 D ec 2 00 8