Arbeitspapier

Optimal income taxation with endogenous participation and search unemployment

We characterize optimal redistributive taxation when individuals are heterogeneous in their skills and their values of non-market activities. Search-matching frictions on the labor markets create unemployment. Wages, labor demand and participation are endogenous. Average tax rates are increasing at the optimum. This shifts wages below their laissez faire value and distorts labor demand upwards. The marginal tax rate is positive at the top of the skill distribution even when the latter is bounded. These results are analytically shown under a Maximin objective when the elasticity of participation is decreasing in the skill level and are numerically confirmed under a more general objective.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 3324

Klassifikation
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Unemployment: Models, Duration, Incidence, and Job Search
Thema
non-linear taxation
redistribution
adverse selection
random participation
unemployment
labor market frictions
Optimale Besteuerung
Einkommensteuer
Steuerprogression
Friktionelle Arbeitslosigkeit
Arbeitslosigkeit
Lohnniveau
Adverse Selection
Arbeitsmarkttheorie
Theorie

Ereignis
Geistige Schöpfung
(wer)
Lehmann, Etienne
Parmentier, Alexis
van der Linden, Bruno
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2011

Handle
Letzte Aktualisierung
20.09.2024, 08:22 MESZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Lehmann, Etienne
  • Parmentier, Alexis
  • van der Linden, Bruno
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2011

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