We examine the importance of possible non-random attrition to an econometric model of life cycle labor supply including joint nonlinear taxation of wage and interest incomes and latent heterogeneity.We use a Wald test comparing attriters to nonattriters and variable addition testing based on...

In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal non-linear income taxation in the presence of quasi-linear preferences in leisure by allowing for involuntary unemployment, job search, an exogenous welfare benefit, and a non-utilitarian...

We develop a model of human capital formation with endogenous labor supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal progressive schedule of the labor income tax and optimal capital income taxes.Subsidies on education ensure efficiency in...

In this paper, a worker s productivity is assumed to depend on his own quality and on the average quality of other employed workers.In this setting, unemployment benefits that induce low quality workers to leave the labor force have important efficiency as well as equity implications.In addition...

If a government imposes a tax on capital income, it may, as a result, lower the private rate of return on capital below the growth rate of an economy, thereby giving rise to the possibility of running a permanent deficit. Since, however, the before-tax rate of return and not the after-tax rate...