Arbeitspapier
Unemployment and tax design
This paper studies optimal income taxation in an environment where matching frictions generate a trade-off for workers between high wages and low unemployment risk. A higher marginal tax rate shifts the trade-off in favor of low unemployment risk, whereas a higher tax burden or unemployment benefit has the opposite effect. Changes in unemployment generate fiscal externalities, which modify optimal tax formulas. I show that optimal employment subsidies (such as the EITC) phase in with income and that the provision of unemployment insurance justifies a positive marginal tax rate even without income heterogeneity. A calibration exercise to the US economy suggests that optimal transfers for low-income individuals are larger if unemployment risk is taken into account.
- Sprache
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Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. TI 2021-061/VI
- Klassifikation
-
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Unemployment: Models, Duration, Incidence, and Job Search
Unemployment Insurance; Severance Pay; Plant Closings
Mobility, Unemployment, and Vacancies: Public Policy
- Thema
-
directed search
optimal taxation
unemployment insurance
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Hummel, Albert Jan
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Hummel, Albert Jan
- Tinbergen Institute
Entstanden
- 2021
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