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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 …
Persistent link: https://www.econbiz.de/10009743921
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 …
Persistent link: https://www.econbiz.de/10013020515