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Viewpoint: Innovations in the theory and practice of redistribution policy

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  • Robin Boadway

Abstract

We present a survey of key results from second‐best optimal redistribution theory and their implications for tax‐transfer policy. The core results include the Corlett‐Hague theorem, the Deaton conditions, the production‐efficiency theorem, the Atkinson‐Stiglitz theorem, and the Mirrlees‐Saez characterization of the optimal non‐linear income tax system. These have been augmented in recent years by optimal participation tax rates, the implications of involuntary unemployment, the use of unconventional instruments, such as minimum wages, in‐kind transfer, and workfare, and the optimal taxation of capital income and bequests. L’auteur présente un survol des principaux résultats théoriques de la redistribution optimale de second‐ordre, et de leurs implications pour les politiques d’imposition et de transferts. Les résultats fondamentaux incluent le théorème de Corlett‐Hague, les conditions de Deaton, les théorèmes d’efficacité en production, le théorème d’Atkinson‐Stiglitz, ainsi que la caractérisation du système optimal d’imposition non‐linéaire du revenu à la Mirrlees‐Saez. Ces derniers résultats ont été enrichis, au cours des dernières années, par certains autres portant sur les taux d’imposition découlant des allocations conditionnelles, les implications du chômage involontaire, l’usage d’instruments non‐conventionnels tels que le salaire minimum, les transferts en nature, le workfare, ainsi que l’imposition optimale des revenus du capital et des legs. Ces résultats sont exposés et leurs implications pour les politiques d’imposition et de transferts sont discutées.

Suggested Citation

  • Robin Boadway, 2011. "Viewpoint: Innovations in the theory and practice of redistribution policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(4), pages 1138-1183, November.
  • Handle: RePEc:wly:canjec:v:44:y:2011:i:4:p:1138-1183
    DOI: 10.1111/j.1540-5982.2011.01670.x
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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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