Optimal redistribution when different workers are indistinguishable

Maurice Marchand, Pierre Pestieau and Maria Racionero

Canadian Journal of Economics, 2003, vol. 36, issue 4, 911-922

Abstract: Using the standard non linear income and commodity taxation framework, we examine the optimal policy to be adopted when the same labour disutility can receive two opposite interpretations: taste for leisure and activity limitation. In the absence of complete information about individual characteristics, an income tax does not allow distinguishing lazy from handicapped individuals. One may rely, however, on a combination of commodity and income taxes to redistribute from the former to the latter when they differ in their preferences for commodities.

JEL-codes: H21 H41 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (21)

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