Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki - Institute of Economic Research, Kyoto University - 2010
How should capital and labor be taxed when individuals' labor income is subject to unin- surable idiosyncratic risks? To address this question, we develop a tractable infinite horizon model with incomplete markets and consider a dynamic optimal taxation problem with linear taxes on the wage and...