EconPapers    
Economics at your fingertips  
 

Optimal asymmetric taxation in a two-sector model with population ageing

Igor Fedotenkov

No 15, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: This paper presents a simple condition for optimal asymmetric labour (capital) taxation/subsidization in a two-sector model with logarithmic utilities and Cobb-Douglas production functions, linked to demographic factors: fertility rate and longevity. The paper shows that depending on parameter values, it may be optimal to tax or subsidize labour in the sectors. If it is optimal to tax the investment-goods sector, a Pareto-improving tax reform is possible. Larger output elasticities of capital in the sectors reduce the possibilities of a Pareto-improving reform, while population ageing in terms of higher longevity enhances the possibilities of welfare improvement for all generations. Fertility rates do not affect optimal taxation.

Keywords: Two sectors; factor mobility; asymmetric taxation; optimality (search for similar items in EconPapers)
JEL-codes: E62 H21 J10 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-10-21
New Economics Papers: this item is included in nep-age, nep-mac and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.lb.lt/uploads/publications/docs/wp_15.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Optimal asymmetric taxation in a two-sector model with population ageing (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lie:wpaper:15

Access Statistics for this paper

More papers in Bank of Lithuania Working Paper Series from Bank of Lithuania Bank of Lithuania Gedimino pr. 6, LT-01103 Vilnius, Lithuania. Contact information at EDIRC.
Bibliographic data for series maintained by Aurelija Proskute ().

 
Page updated 2025-03-30
Handle: RePEc:lie:wpaper:15