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Income Redistribution and Risky Occupational Choices

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  • Poutvaara Panu

    (Centre for Economic and Business Research (CEBR))

Abstract

I analyze the effect of linear taxation on discrete choices between risky occupations. In the basic model, two occupations differ in the magnitude of income risks, and citizens differ in their expected productivity in one of the occupations. I derive sufficient conditions under which income redistribution encourages a greater part of the population to choose the riskier occupation associated with higher expected income. The results are then generalized to an arbitrary number of groups of citizens facing an arbitrary number of discrete occupational choices belonging to the same linear distribution class.

Suggested Citation

  • Poutvaara Panu, 2002. "Income Redistribution and Risky Occupational Choices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-19, July.
    • Handle: RePEc:bpj:bejeap:v:topics.2:y:2002:i:1:n:8
    DOI: 10.2202/1538-0653.1049
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    1. Maggie Cahalan & Wendy Mansfield & Natalie Justh, "undated". "The Status of Academic Libraries in the United States: Results from the 1996 Academic Library Survey with Historical Comparisons," Mathematica Policy Research Reports e75b610016454595b8935532e, Mathematica Policy Research.
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    Cited by:

    1. Kanniainen, Vesa & Poutvaara, Panu, 2007. "Imperfect Transmission of Tacit Knowledge and Other Barriers to Entrepreneurship," IZA Discussion Papers 2859, Institute of Labor Economics (IZA).
    2. Clemens, Christiane, 2004. "Entrepreneurship and Growth - An Overlapping Generations Approach -," Hannover Economic Papers (HEP) dp-304, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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