Redistributive Taxation in a Partial-Insurance Economy
We conduct a welfare analysis of redistributive labor taxation in a tractable heterogeneous-agents economy. We highlight four key considerations that determine the optimal overall progressivity of the tax schedule: (i) the preference weight on public consumption goods, (ii) the variance of idiosyncratic risk, (iii) the fraction of idiosyncratic risk that can be insured privately, and (iv) the elasticity of labor supply.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
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