Table 1.
Parameters for calibration.
| France | Germany | Italy | Spain | UK | |
|---|---|---|---|---|---|
| Calibration | |||||
| Pareto Threshold Start | €150,000 | €150,000 | €150,000 | €150,000 | €150,000 |
| Pareto Threshold Constant | €250,000 | €250,000 | €250,000 | €250,000 | €250,000 |
| Pareto Parameter Start | 2.8 | 2.95 | 2.56 | 2.21 | 2.34 |
| Pareto Parameter Constant | 2.20 | 1.67 | 2.22 | 2.11 | 1.78 |
| Mass of People with Zero Earnings | 5.6% | 4.4% | 3.2% | 3.8% | 7.0% |
| Lump-Sum Transfer | €13,347 | €20,763 | €2,540 | €6,991 | €15,037 |
| Measure of Fiscal Pressure | |||||
| 5-year Payback | 2.65% | 2.96% | 3.52% | 3.58% | 4.90% |
| 10-year Payback | 1.32% | 1.48% | 1.76% | 1.79% | 2.45% |
Notes: The constant threshold of €250,000 is chosen based on the estimation by Jenkins (2017). The starting Pareto parameter at the income threshold of €150,000 is chosen such that the hazard rate is continuous as in Sachs et al. (2020). The values of the constant Pareto parameters are from Atkinson et al. (2011). The mass of people with zero earnings matches the shares of recipients of disability benefits reported by OECD (2009). For France, we use the average across OECD countries. The values of the lump-sum transfer match the average minimum income protection from the 2017 Social Assistance and Minimum Income Protection Interim Dataset and are converted into Euro. The 5-year (10-year) payback measure denotes a scenario where governments are required to pay back the additional stock of debt in five (ten) years. Both measures for fiscal pressure are expressed as a percentage of GDP.