There is clear evidence that fairness plays a role in redistribution. Individuals want tocompensate others for their misfortune, while they allow them to enjoy the fruits of their effort.Such fairness considerations have been introduced in political economy and optimal incometax models with a...

This paper is the first to provide evidence of efficient taxation of groups with heterogeneouslevels of ‘tax morale’. We set up an optimal income tax model where high tax morale impliesa high subjective cost of evading taxes. The model predicts that ‘nice guys finish last’: groupswith...

International comparisons of minimum-wage levels have largely focused on the gross valueof minimum wages, ignoring the effects of taxation on both labour costs and the net incomeof employees. This paper presents estimates of the tax burdens facing minimum-wageworkers. These are used as a basis...

The rational prodigality argument, which often serves to justify social security,is considered in a second-best tax framework with endogenous labor supply. Rationalprodigality renders the familiar policies time inconsistent. We analyze time consistentpolicies and show that a wage tax suffices to...

This essay discusses the policy debate concerning optimal taxation and the distribution of income.It begins with a brief overview of trends in income inequality, the leading hypothesis to explain thesetrends, and the distribution of the tax burden. It then considers the framework that economists...

Die von der Bundesregierung geplante Steuerreform soll die Wettbewerbsfähigkeit deutscher Unternehmen stärken und den Standort Deutschland für in- und ausländische Investoren attraktiver machen. Berechnungen des ZEW und der Universität Mannheim zeigen indessen: Die Steuerentlastung der...

Skill shortages are often portrayed as a major problem for the economies of many countriesincluding the Australian economy. Yet, there is surprisingly little evidence about theirprevalence, causes and consequences. This paper attempts to improve our understandingabout these issues by using...

I examine recent changes in labour markets and employment practices in Japan. I find little evidence that Japan is converging towards an Anglo-American type labour market. Mobility rates continue to be low, and there is little indication that this will change greatly in the future. Large firms...

With decreasing migration costs and fiscal decentralisation on the policy agenda in variousOECD countries, the impact of taxation on migration is of growing interest. Empirical studieson this topic have been limited due to a lack of comparable data in an international contextand a lack of...

This paper extends the standard human capital model with real options. Real options influenceinvestment behavior when risky investments in human capital are irreversible and individualscan affect the timing of the investment. Option values make individuals more reluctant toinvest in human...