We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear …

,000 children and their parents’ earnings. Our measure of educational attainment is the A-Level degree, a requirement for access to … parental income rank is associated with a 5.2 percentage point increase in the probability to obtain an A-Level. This parental … income gradient has not changed for the birth cohorts from 1980 to 1996, despite a large-scale policy of expanding upper …