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

Recently, a voluminous literature estimating the taxable income elasticity has emerged as an important field in … taxable income, reacts to changes in marginal tax rates. In this study we use a rich panel data set and a sequence of tax … obtain uncompensated taxable labor income elasticities of around 0.21 for men and 0.96-1.44 for women. In contrast to earlier …

main findings are that: (1) Leisure and household income are the most important variables in the utility function of the …

We study optimal nonlinear income taxation when earnings can differ because of both ability and luck, so the income tax … uncertainty has evolved since Mirrlees' original contribution. The literature on the income tax as a social insurance device is …. We provide a general treatment of the optimal income tax under uncertainty when households differ in ability. We …

data. How these differences affect saving in theoretical models depends on the metric one uses for risk. For labor-income …How does risk affect saving? Empirical work typically examines the effects of detectible differences in risk within the … risk, second-degree increases in risk require prudence to induce increased saving demand. However, prudence is not …

In this model of education, where individuals are exposed both to educational risk and to wage risk within the skilled … present risks is a dichotomic task: Wage risk is diversified ex post among the skilled by graduate taxation and skill …-specific tuition fees. Educational risk of failure and inequality between skilled and unskilled workers are mitigated ex ante by …

We derive a general optimal income tax formula when individuals respond along both the intensive and extensive margins … and when income effects can prevail. Individuals are heterogeneous across two dimensions: their skill and their disutility …