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Tagging with leisure needs

  • Pierre Pestieau
  • Maria Racioenero

    ()

We study optimal redistributive taxes when individuals differ in two characteristics - earning ability and leisure needs - assumed to be imperfectly correlated. Individuals have private information about their abilities but needs are observable. With two different levels of observable needs the population can be separated into two groups and needs may be used as a tag. We first assume that the social planner considers individuals should be compensated for their leisure needs and characterize the optimal redistributive policy, and the extent of compensation for needs, with tagging. We also consider an alternative social objective in which individuals are deemed responsible for their needs.

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File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp553.pdf
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Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2011-553.

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Length: 24 Pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:acb:cbeeco:2011-553
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  1. Ritva Immonen & Ravi Kanbur & Michael Keen & Matti Tuomala, 1994. "Tagging and taxing: the optimal use of categorical and income information in designing tax/transfer schemes," IFS Working Papers W94/05, Institute for Fiscal Studies.
  2. Alesina, Alberto & Ichino, Andrea & Karabarbounis, Loukas, 2007. "Gender Based Taxation and the Division of Family Chores," IZA Discussion Papers 3233, Institute for the Study of Labor (IZA).
  3. Blomquist, Sören & Micheletto, Luca, 2003. "Age Related Optimal Income Taxation," Working Paper Series 2003:7, Uppsala University, Department of Economics.
  4. CREMER, Helmuth & PESTIEAU, Pierre & ROCHET, Jean-Charles, 1999. "Direct versus indirect taxation: the design of the tax structure revisited," CORE Discussion Papers 1999010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. N. Gregory Mankiw & Matthew C. Weinzierl, 2009. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution," Harvard Business School Working Papers 09-139, Harvard Business School.
  6. LOZACHMEUR, Jean-Marie, 2002. "Optimal age specific income taxation," CORE Discussion Papers 2002046, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Winfried Pohlmeier & Luc Bauwens & David Veredas, 2007. "High frequency financial econometrics. Recent developments," ULB Institutional Repository 2013/136223, ULB -- Universite Libre de Bruxelles.
  8. Boadway, Robin & Keen, Michael, 2000. "Redistribution," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 12, pages 677-789 Elsevier.
  9. BOADWAY, R. & MARCHAND, M. & PESTIEAU, P. & del MAR RACIONERO, M., 2001. "Optimal redistribution with heterogeneous preferences for leisure," CORE Discussion Papers 2001025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Marc Fleurbaey & Francois Maniquet, 2002. "Fair Income Tax," Economics Working Papers 0021, Institute for Advanced Study, School of Social Science.
  11. FLEURBAEY, Marc & MANIQUET, François, . "Help the low skilled or let the hardworking thrive? A study of fairness in optimal income taxation," CORE Discussion Papers RP -1970, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. repec:cup:cbooks:9780521681599 is not listed on IDEAS
  13. Jonathan Guryan & Erik Hurst & Melissa Schettini Kearney, 2008. "Parental Education and Parental Time With Children," NBER Working Papers 13993, National Bureau of Economic Research, Inc.
  14. BOADWAY, Robin & PESTIEAU, Pierre, . "Indirect taxation and redistribution: the scope of the Atkinson-Stiglitz theorem," CORE Discussion Papers RP -1647, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Nicholas Rowe & Frances Woolley, 1996. "The Efficiency Case of Universality," Carleton Economic Papers 96-05, Carleton University, Department of Economics, revised May 1999.
  16. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  17. Fleurbaey, Marc, 1995. "Equality and responsibility," European Economic Review, Elsevier, vol. 39(3-4), pages 683-689, April.
  18. Helmuth Cremer & Firouz Gahvari & Jean-Marie Lozachmeur, 2010. "Tagging and Income Taxation: Theory and an Application," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 31-50, February.
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