Optimal income taxation with endogenous participation and search unemployment

Etienne Lehmann (), Alexis Parmentier () and Bruno Vanderlinden
Additional contact information
Alexis Parmentier: CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion
Bruno Vanderlinden: UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain
Authors registered in the RePEc Author Service: Bruno Van der Linden

Post-Print from HAL

Abstract: We characterize optimal redistributive taxation when individuals are heterogeneous in their skills and their values of non-market activities. Search-matching frictions on the labor markets create unemployment. Wages, labor demand and participation are endogenous. Average tax rates are increasing at the optimum. This shifts wages below their laissez faire value and distorts labor demand upwards. The marginal tax rate is positive at the top of the skill distribution even when the latter is bounded. These results are analytically shown under a Maximin objective when the elasticity of participation is decreasing in the skill level and are numerically confirmed under a more general objective. Under the Maximin, above approximately $20,000 per year, our model recommends higher marginal tax rates than a comparable competitive setting.h

Keywords: Non-linear taxation; Redistribution; Adverse selection; Random participation; Unemployment; Labor market frictions. (search for similar items in EconPapers)
Date: 2011-12-05
References: Add references at CitEc
Citations: View citations in EconPapers (54)

Published in Journal of Public Economics, 2011

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Optimal income taxation with endogenous participation and search unemployment (2011)
Working Paper: Optimal Income Taxation with Endogenous Participation and Search Unemployment (2011)
Working Paper: Optimal income taxation with endogenous participation and search unemployment (2011)
Working Paper: Optimal Income Taxation with Endogenous Participation and Search Unemployment (2009)
Working Paper: Optimal income taxation with endogenous participation and search unemployment (2008)
Working Paper: Optimal Income Taxation with Endogenous Participation and Search Unemployment (2008)
Working Paper: Optimal Income Taxation with Endogenous Participation and Search Unemployment (2008)
Working Paper: Optimal Income Taxation with Endogenous Participation and Search Unemployment (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01248156

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().