Optimal Employment Subsidy to Heterogeneous Workers under Asymmetric Information
AbstractIt is wellknown that unemployment benefits and minimum income guarantees generate an unemployment trap. The unemployment is indeed not enticed to work because he is imposed at a 100% marginal tax rate. In this paper, we design the optimal employment without risking its budget deficit. The subsidy is applied on top of an initial tax-benefit system that can not be reformed. We show how this subsidy translates the point of 100% marginal tax to workers with lower abilities. Simulations show that full employment can be achieved in many cases. We relate then the properties of such subsidy to those of optimal non-linear taxation models.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1998009.
Date of creation: 01 Apr 1998
Date of revision:
altruism; habits; catching-up; regime shift;
Find related papers by JEL classification:
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Picard, Pierre M., 2001. "Job additionality and deadweight spending in perfectly competitive industries: the case for optimal employment subsidies," Journal of Public Economics, Elsevier, vol. 79(3), pages 521-541, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST).
If references are entirely missing, you can add them using this form.