BANNING INFORMATION AS A REDISTRIBUTIVE DEVICE

Daniel Gottlieb () and Lucas Maestri

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: In this paper we analyze the optimality of allowing firms to observe signals of workers' characteristics in an optimal taxation framework. We show that it is always optimal to prohibit signals that disclose information about differences in the intrinsic productivities of workers like mandatory health exams and IQ tests, for example. On the other hand, it is never optimal to forbid signals that reveal information about the comparative advantages of workers like their specialization and profession. When signals are mixed (they disclose both types of information), there is a trade-off between efficiency and equity. It is optimal to prohibit signals with sufficiently low comparative advantage content.

JEL-codes: H21 H24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2004
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Working Paper: Banning information as a redistributive device (2004)
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