Taxes and employment subsidies in optimal redistribution programs

by Paul Beaudry

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• 9 Currently reading

Published 1998 by National Bureau of Economic Research in Cambridge, MA .
Written in English

Subjects:

• Income tax.,
• Employment subsidies.

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About the Edition

This paper characterizes an optimal redistribution program when taxation authorities: (1) are uninformed about individuals value of time in both market and non-market activities observe both market-income and time allocated to market employment, and (3) are utilitarian. Formally, the problem is a special case of a multidimensional screening problem with two dimensions of unobserved attributes. In contrast to much of the optimal income taxation literature, we show that optimal redistribution in this environment involves distorting market employment upwards for low net-income individuals (through negative marginal income taxes or employment subsidies) and distorting employment downward for high net-income individuals (through positive marginal income taxes). It is also shown that workfare is only part of an optimal program if certain individuals have not access to market employment.

Edition Notes

Statement	Paul Beaudry, Charles Blackorby.
Series	NBER working paper series -- working paper 6355, Working paper series (National Bureau of Economic Research) -- working paper no. 6355.
Contributions	Blackorby, Charles, 1937-, National Bureau of Economic Research.
Classifications
LC Classifications	HB1 .W654 no. 6355
The Physical Object
Pagination	49 p. :
Number of Pages	49
ID Numbers
Open Library	OL22404049M

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