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Optimal Mirrleesian Taxation in Non-competitive Labor Markets

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  • Carlos da Costa

    (Fundação Getulio Vargas)

Abstract

We study optimal labor income taxation in non-competitive labor markets. Firms with market power offer screening contracts to workers privately informed about their own productivity. We provide necessary and sufficient conditions for tax implementation of constrained efficient allocations in such environment. For a Utilitarian objective, if an allocation is implementable almost all workers face negative marginal tax rates, however, not all allocations that are implementable in a competitive setting are implementable in this non-competitive environment.

Suggested Citation

  • Carlos da Costa, 2017. "Optimal Mirrleesian Taxation in Non-competitive Labor Markets," 2017 Meeting Papers 1207, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:1207
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    References listed on IDEAS

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    Cited by:

    1. Aronsson, Thomas & Micheletto, Luca, 2017. "Optimal Redistributive Income Taxation and Efficiency Wages," Umeå Economic Studies 953, Umeå University, Department of Economics.
    2. Carlos E. da Costa & Lucas J. Maestri, 2019. "Optimal Mirrleesian taxation in non-competitive labor markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(4), pages 845-886, November.
    3. Zhigang Feng & Anne Villamil, 2022. "Funding employer-based insurance: regressive taxation and premium exclusions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(2), pages 509-540, April.
    4. Thomas Aronsson & Luca Micheletto, 2017. "Optimal Redistributive Income Taxation and Efficiency Wages," Working Papers 107, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    5. Albert Jan Hummel, 2021. "Monopsony Power, Income Taxation and Welfare," CESifo Working Paper Series 9128, CESifo.
    6. Hummel, Albert Jan, 2023. "Tax curvature," Journal of Public Economics, Elsevier, vol. 224(C).
    7. Spencer Bastani & Sören Blomquist & Luca Micheletto, 2017. "Heterogeneity in Needs and Negative Marginal Tax Rates," CESifo Working Paper Series 6708, CESifo.
    8. Alexander Tarasov & Robertas Zubrickas, 2021. "Optimal Income Taxation under Monopolistic Competition," CESifo Working Paper Series 9309, CESifo.
    9. Albert Jan Hummel, 2021. "Monopsony power, income taxation and welfare," Tinbergen Institute Discussion Papers 21-051/VI, Tinbergen Institute.
    10. Bahal, Girish & Shrivastava, Anand, 2021. "Supply variabilities in public workfares," Journal of Development Economics, Elsevier, vol. 150(C).
    11. Albert Jan Hummel, 2021. "Tax Curvature," CESifo Working Paper Series 9220, CESifo.

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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