Resource title

Optimal Redistributive Taxation in a Search Equilibrium Model

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Resource description

This paper characterizes optimal non-linear income taxation in an economy with a continuum of unobservable productivity levels and endogenous involuntary unemployment due to frictions in the labor markets. Redistributive taxation distorts labor demand and wages. Compared to their efficient values, gross wages, unemployment and participation are lower. Average tax rates are increasing. Marginal tax rates are positive, even at the top. Finally, numerical simulations suggest that redistribution is much more important in our setting than in a comparable Mirrlees (1971) setting.

Resource author

Mathias Hungerb├╝hler, Etienne Lehmann, Alexis Parmentier, Bruno van der Linden

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/20759

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Adapt according to the presented license agreement and reference the original author.