Optimal income taxation and the ability distribution: implications for migration equilibria
As recently argued by Diamond , one of the key factors explaining the progressivity of an optimal non-linear income tax is the distribution of productivity among workers. Migration is one source of changes in the productivity distribution. How changes in the population's ability distribution affect optimal income tax schedules has received little attention. Changing the distribution generally changes both the objective function and the government budget constraint. We first consider the comparative statics of the fraction of highly-skilled workers with a Rawlsian welfare function (so that only the second effect is present) and a quasi-linear utility function. We perform the same analysis for a despotic social welfare function, and present some results for a utilitarian social welfare function. We study the interaction between mobility and redistributive taxation. We consider mobility by either the skilled or unskilled population in both Rawlsian and majority voting frameworks where governments take the population as fixed. Our main result is that equal ability distributions across jurisdictions is a stable equilibrium when the unskilled are mobile, but only under certain conditions when the skilled are mobile.
|Date of creation:||00 Jun 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cremer, Helmuth & Pestieau, Pierre, 1998.
"Social insurance, majority voting and labor mobility,"
Journal of Public Economics,
Elsevier, vol. 68(3), pages 397-420, June.
- CREMER, Helmuth & PESTIEAU, Pierre, . "Social insurance, majority voting and labor mobility," CORE Discussion Papers RP 1328, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Wilson, John Douglas, 1991.
"Tax competition with interregional differences in factor endowments,"
Regional Science and Urban Economics,
Elsevier, vol. 21(3), pages 423-451, November.
- Wilson, J.D., 1990. "Tax Competition With Interregional Differences In Factor Endowments," Working Papers 4, John Deutsch Institute for the Study of Economic Policy.
- Joseph E. Stiglitz, 1981.
"Self-Selection and Pareto Efficient Taxation,"
NBER Working Papers
0632, National Bureau of Economic Research, Inc.
- Weymark, John A, 1987. "Comparative Static Properties of Optimal Nonlinear Income Taxes," Econometrica, Econometric Society, vol. 55(5), pages 1165-85, September.
- LEITE MONTEIRO , Manuel, 1994.
"Redistributive Policy with Labour Mobility across Countries,"
CORE Discussion Papers
1994070, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Leite-Monteiro, Manuel, 1997. "Redistributive policy with labour mobility across countries," Journal of Public Economics, Elsevier, vol. 65(2), pages 229-244, August.
- Brueckner, Jan K. & Zenou, Yves, 1999. "Harris-Todaro models with a land market," Regional Science and Urban Economics, Elsevier, vol. 29(3), pages 317-339, May.
- Hindriks, J., 1999.
"Mobility and Redistributive Politics,"
9915, Exeter University, Department of Economics.
- Flatters, Frank & Henderson, Vernon & Mieszkowski, Peter, 1974. "Public goods, efficiency, and regional fiscal equalization," Journal of Public Economics, Elsevier, vol. 3(2), pages 99-112, May.
- Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
- Epple, Dennis & Filimon, Radu & Romer, Thomas, 1984. "Equilibrium among local jurisdictions: toward an integrated treatment of voting and residential choice," Journal of Public Economics, Elsevier, vol. 24(3), pages 281-308, August.
- repec:ebl:ecbull:v:8:y:2002:i:2:p:1-6 is not listed on IDEAS
- David E. Wildasin, 1994.
"Income Redistribution and Migration,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 27(3), pages 637-56, August.
- Wilson, John Douglas, 1992. "Optimal Income Taxation and International Personal Mobility," American Economic Review, American Economic Association, vol. 82(2), pages 191-96, May.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2002036. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.