Optimal Mirrleesian taxation in non-competitive labor markets

Carlos Eugênio da Costa () and Lucas Maestri

Economic Theory, 2019, vol. 68, issue 4, No 4, 845-886

Abstract: Abstract This study investigated optimal labor income taxation in non-competitive labor markets. Necessary and sufficient conditions are provided for constrained efficient allocations that are implementable via taxes. Not all allocations that can be implemented in a competitive setting satisfy the necessary conditions for implementation. If an allocation that maximizes a utilitarian objective is implementable then almost all workers face negative marginal tax rates. If the planner’s objective is Rawlsian, implementation is always possible with a well-chosen unemployment benefit financed by taxes on profits.

Keywords: Mirrlees’ problem; Non-competitive labor markets; Tax implementation (search for similar items in EconPapers)
JEL-codes: D82 H21 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Working Paper: Optimal Mirrleesian Taxation in Non-competitive Labor Markets (2017)
Working Paper: Optimal Mirrleesian taxation in non-competitive labor markets (2015)
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DOI: 10.1007/s00199-018-1147-3

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