Redistributive Taxation and Social Insurance

Helmuth Cremer and Pierre Pestieau

No 1995054, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies the role of social insurance as a redistributive mechanism in presence of an optimal (linear or general) income tax. It considers a second-best setting with two unobservable individual characteristics: ability, measured by the wage rate and risk, measured by the probability of incurring a loss. It shows that both tax progressivity and the optimal level of social insurance crucially depend on the correlation between ability and risk.

Date: 1995-10-01
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Related works:
Journal Article: Redistributive taxation and social insurance (1996)
Working Paper: Redistributive taxation and social insurance (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1995054

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