Is It Legitimate to Encourage Work Sharing?
We study a generalization of Mirrlees' income taxation model in which qualifications of workers are both endogenous and observable by the government. Individuals differ by their inobservable abilities, which affect simultaneously their disutility of labor and their cost of training. In general the optimal tax schedule does not only depend on income but also on its "components", namely wage rate (or qualification) and labor supply. We find conditions under which it is optimal to subsidize lower qualifications or to encourage work sharing.
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