Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market

Arbeitspapier

In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4938

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Wage Level and Structure; Wage Differentials
• Subject: adverse selection ; labor market ; optimal taxation ; pooling ; redistribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bastani, Spencer ; Blumkin, Tomer ; Micheletto, Luca
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/102095
• Last update: 10.03.2025, 11:42 AM CET