Tax implementability of fair allocations
This paper examines the tax implementability of allocations based on fairness as no-envy (or envy-freeness) and its alternatives, by a tax schedule that depends on labor supply and gross income ((y,l)-implementability). A relevant incentive constraint is perishability of abilities, where agents can exert a lower ability level than they actually possess. We first show that in any economy, every envy-free allocation is (y,l)-implementable. On the other hand, whereas we already know that no-envy may be incompatible with first-best Pareto efficiency, the alternative equity concepts which circumvent this first-best equity-efficiency trade-off meet the obstacle of tax implementability even when labor supply is observable. We also clarify necessary and sufficient domain restrictions under which the egalitarian equivalent allocations satisfy the (y,l)-implementability condition. Copyright Springer-Verlag Berlin/Heidelberg 2004
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 9 (2004)
Issue (Month): 1 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/journal/10058|