When redistribution leads to regressive taxation

Cyril Hariton () and Gwenael Piaser ()

No 2004020, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We introduce labor contracts, in a framework of optimal redistribution: firms have some local market power and try to discriminate among heterogeneous workers. In this setting we show that if the firms have perfect information, i.e, they perfectly discriminate against workers and take all the surplus, the best tax function is flat. If the firms have imperfect information, i.e, if they offert incentive contracts, then (under some assumptions) the best redistributive taxation is regressive.

Keywords: income taxation; redistribution; labor market; multi-principals; adverse selection; mechanism design (search for similar items in EconPapers)
JEL-codes: D21 D82 H21 L14 (search for similar items in EconPapers)
Date: 2004-04
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: When Redistribution Leads to Regressive Taxation (2007)
Working Paper: When Redistribution Leads to Regressive Taxation (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004020

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