Abstract

We optimize the horizontal fiscal equalization of Chile and compute its welfare gain. We find that Chile would improve the national welfare in a range of 3%12% by increasing the number of properties that pay taxes. Furthermore, the optimal design will also reduce the municipal disparity of population by 7% and inequality in productivity by 6%. Our results provide insights for promoting spatial equity without fearing consequences on aggregated efficiency.

Autores

Dusan Paredes, Sebastián Cuellar, Alicia Chavez