Well-Being, Poverty and Labor Income Taxation: Theory and Application to Europe and the U.S

Francois Maniquet and Dirk Neumann ()

No 10181, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In a model in which agents differ in wages and preferences over labor time-consumption bundles, we study labor income tax schemes that alleviate poverty. To avoid conflict with individual well-being, we require redistribution to take place between agents on both sides of the poverty line provided they have the same labor time. This requirement is combined with efficiency and robustness properties. Maximizing the resulting social preferences under incentive compatibility constraints yields the following evaluation criterion: tax schemes should minimize the labor time required to reach the poverty line. We apply this criterion to European countries and the US.

Keywords: labor income taxation; poverty; well-being (search for similar items in EconPapers)
JEL-codes: D63 H21 I32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016-08
New Economics Papers: this item is included in nep-eur, nep-hap, nep-ltv and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: American Economic Journal: Microecoomics, 2021, 13 (2), 276 - 310

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Working Paper: Well-Being, Poverty and Labor Income Taxation: Theory and Application to Europe and the U.S (2016)
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