Unemployment BeneÞts and Optimal Non-Linear Income Taxation∗
نویسنده
چکیده
This paper explores the rationale for unemployment beneÞts as a complement to optimal non-linear income taxation. High-skilled workers and low-skilled workers face different exogenous risks of being unemployed. As long as the low-skilled workers face a higher unemployment risk, we Þnd that there is a case for over-insuring the lowskilled, hence the unemployment beneÞts of the low-skilled should be higher than the pure insurance purpose would prescribe. This effect is likely to prevail in a model with a more realistic treatment of the labor market. JEL-classiÞcation: H21, J22, J41, J64
منابع مشابه
Unemployment Benefits and Optimal Non-Linear Income Taxation
This paper explores the rationale for unemployment beneÞts as a complement to optimal non-linear income taxation. High-skilled workers and low-skilled workers face different exogenous risks of being unemployed. As long as the low-skilled workers face a higher unemployment risk, we Þnd that there is a case for over-insuring the lowskilled, hence the unemployment beneÞts of the low-skilled should...
متن کاملNo. 2001-77 UNEMPLOYMENT VS. IN-WORK BENEFITS WITH SEARCH UNEMPLOYMENT AND OBSERVABLE ABILITIES
This paper explores the optimal interaction between the tax system and unemployment compensation in insuring people against the risks of involuntary unemployment and low ability. To that end, we introduce search unemployment in a model of optimal non-linear income taxation. We ...nd that the optimal search subsidy (i.e. the di¤erence between the in-work bene...t and the unemployment bene...t) i...
متن کاملThe desirability of commodity taxation under non-linear income taxation and heterogeneous tastes
This paper revisits the Atkinson–Stiglitz result on uselessness of commodity taxation in the presence of optimal non-linear income taxation in a more general setup, namely when tastes are heterogeneous. This general analysis displays the key economic assumptions under which the Atkinson–Stiglitz result is robust. A small tax on a given commodity is desirable if high income earners have a relati...
متن کاملOptimal income taxation with endogenous participation and search unemployment∗. Numerical Results are Preliminary
This paper characterizes the optimal redistributive taxation when individuals are heterogeneous in two exogenous dimensions: 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. The government only observes wage levels. Under a Maximin objective, if the elasticity of part...
متن کاملOptimal Labor Income Taxation∗
This handbook chapter reviews recent developments in the theory of optimal labor income taxation. We emphasize connections between theory and empirical work that were initially lacking from optimal income tax theory. First, we provide historical and international background on labor income taxation and means-tested transfers. Second, we present the simple model of optimal linear taxation. Third...
متن کامل