Optimal factor taxation in a scale free model of vertical innovation

Barbara Annicchiarico (), Valentina Antonaroli and Alessandra Pelloni

Economic Inquiry, 2022, vol. 60, issue 2, 794-830

Abstract: The objective of the paper is to study how the tax burden arising from an exogenous stream of public expenditures and transfers should be distributed between labor and capital in a scale‐less endogenous growth model, where the engine of growth are successful innovations. Our laboratory is a prototypical quality ladder model with a labor/leisure choice where research and development productivity is decreasing in the size of the economy. Our contribution is to show that even when labor supply has no effects on growth in the long run, it will still be optimal to tax capital for reasonable parametrizations of the model.

Date: 2022
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1111/ecin.13033

Related works:
Working Paper: Optimal Factor Taxation in A Scale Free Model of Vertical Innovation (2020)
Working Paper: Optimal Factor Taxation in A Scale Free Model of Vertical Innovation (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:60:y:2022:i:2:p:794-830

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