Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market

Spencer Bastani, Tomer Blumkin () and Luca Micheletto
Additional contact information
Tomer Blumkin: Ben Gurion University

No 9154, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.

Keywords: optimal taxation; labor market; adverse selection; pooling; redistribution (search for similar items in EconPapers)
JEL-codes: D82 H21 J31 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2015-06
New Economics Papers: this item is included in nep-cta, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published - published in: Journal of Public Economics, 2015, 131, 41-57

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Related works:
Journal Article: Optimal wage redistribution in the presence of adverse selection in the labor market (2015)
Working Paper: Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market (2015)
Working Paper: Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market (2015)
Working Paper: Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market (2014)
Working Paper: Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market (2014)
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