Monday, September 23, 2019
Danny Yagan (UC-Berkeley) presents Place-Based Redistribution at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:
Place-based redistribution is ubiquitous but has traditionally enjoyed little support among economists. We develop a class of spatial equilibrium models characterizing the equity-efficiency tradeoff that arises when taxes and transfers are indexed to location. Transfers from one region to another are found to be welfare improving under empirically plausible assumptions on preference heterogeneity, even in an environment with optimal place-blind income taxes. A calibration shows that optimal place-based redistribution may be substantial.