This paper analyzes the effects of tax-benefit reforms in a framework integrating endogenous labor supply and unemployment. There is a discrete distribution of individuals’ productivities and labor supply decisions are limited to the participation decision. Unemployment is modeled in a search and matching framework with individual wage bargaining. We adopt an ordinal approach to social welfare comparisons and explore numerically various reform policies. For Switzerland, a participation income is shown to be an “uncontroversial” tax reform, improving social welfare according to any social welfare criterion displaying inequality aversion.
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Length: 40 pages Date of creation: Feb 2005 Date of revision: Handle: RePEc:gen:geneem:2005.03
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Shorrocks, Anthony F, 1983.
"Ranking Income Distributions,"
Economica,
London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
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