Estimating the Social Marginal Cost of Public Funds: A Microdata Approach

Shun ichiro Bessho, Masayoshi Hayashi

Research output: Contribution to journalArticle

2 Citations (Scopus)


In this study, we recast the formula of the social marginal cost of public funds (SMCF) and highlight the role of what we call individual marginal costs of public funds (IMCF). After elaborating on aspects of distributional weights, we estimate the wage elasticity of labor supply and the IMCFs on a household basis. This allows us to explore not only the distributions of the elasticity and the IMCFs but also their relations to household income, which helps us assess the assumptions made in previous studies. Further, we use the SMCF estimates to evaluate the system of personal income taxes in Japan.

Original languageEnglish
Pages (from-to)360-385
Number of pages26
JournalPublic Finance Review
Issue number3
Publication statusPublished - 2013 May



  • distributional w.
  • Japan
  • progressive t.
  • social marginal cost of public funds

ASJC Scopus subject areas

  • Finance
  • Public Administration
  • Economics and Econometrics

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