When Kolm Meets Mirrless: ELIE

Alain Trannoy and Laurent Simula

No 811, IDEP Working Papers from Institut d'economie publique (IDEP), Marseille, France

Abstract: This article discusses the properties of Kolm’s ELIE proposal in the Context of optimal income taxation “à la Mirrlees”. It first shows that ELIE gives rise to non-standard type-dependent budget sets, which has important implications in terms of a minimum labour requirement. Second, it adopts the Mirrleesian framework to characterize ELIE as a first-best tax scheme and casts light on the very specific shape of the distribution of social weights that generate it. Third, it shows that ELIE is incentive compatible only when both gross income and time worked are verifiable, which seems to be a strong assumption for a non-negligible number of taxpayers.

Keywords: ELIE; Income Redistribution; Optimal Taxation; Incentive Compatibility. (search for similar items in EconPapers)
JEL-codes: D63 H21 H24 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-11, Revised 2008-08
New Economics Papers: this item is included in nep-pub and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Chapter: When Kolm Meets Mirrlees: ELIE (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:iep:wpidep:0811

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