Findeisen, Sebastian; Sachs, Dominik - 2012 - This version: September 20, 2012
individuals face wage uncertainty. Though optimal labor distortions are history-dependent, i.e. depend on income and education …, simple policy instruments can yield the desired distortions: a single nonlinear labor income tax schedule combinedwith income … in income for this range. This result holds along the Pareto frontier. We compare the second best to a situation where …