The traditional avoidance literature undeservedly neglects tax base distribution as a factor affecting the avoidance price, and generally assumed to be equal to the avoidance cost. In reality, avoidance providers are usually either high-skilled specialists or insiders. The strong collusion thus,...

Guided by a simple theory of task assignment and time allocation, we investigate the long run response to national differences in tax rates on labor income, payrolls and consumption. The theory implies that higher tax rates reduce work time in the market sector, increase the size of the shadow...

We investigate the welfare implications of changing a proportional capital income tax for a model economy in which heterogeneous households face labor income risk and trade only one asset. Labor taxes are adjusted at the time of the reform to maintain long run budget balance. Our stochastic...

The Ricardian equivalence theorem has been widely debated since (at least) the seventies. The theorem states that househoolds should not change their consumption path in response to changed timing of taxes, given the path of government consumption. In the paper, theoretical models giving rise to...

The paper analyzes the effects on consumption from changes in the riskiness of taxes. It starts by reinterpreting the Sandmo [1970] paper on general capital income risk to the case of risky capital taxation. In his framework the concept of a mean preserving spread (MPS) is used for the risk...

This paper examines the implications of income redistribution on human capital accumulation and income inequality, presenting a model where human capital investment is indivisible and agents differ in economic opportunity as well as intellectual ability. It is shown that the impact of...

This paper studies the implications of interregional redistributive taxation on interregional and interpersonal inequality and on social welfare. We introduce a model of two regions, where individuals are differentiated by their ability and opportunity, the former being determined by heritage...

This paper considers redistributive as well as political consequences of tax avoidance. When investing in tax avoidance is possible, the official tax rate does not necessarily correspond to what individuals actually pay in taxes. This affects both redistributive outcomes as well as individual's...

The generalised entropy measure is applied to decompose overall income inequality over several years into one part showing inequality of long-run (permanent) income and one part showing variability of single individuals' incomes over time. By comparing these components of inequality for pre- and...

The labor-supply elasticity is a central element in many macroeconomic models. We argue that assumptions underlying previous econometric estimates of the intertemporal labor supply elasticity are inconsistent with incomplete markets economies. In particular, if the econometrician ignores...