If a small open economy wishes to restrict it's greenhouse gas emissions, it has to decide whether to impose uniform taxes on all polluters or to resort to a discriminatory policy. In practice, countries tend to impose higher taxes on households and to tax the industrial sector more leniently....

This paper characterizes the optimal redistributive tax schedule in a matching unemployment framework where (voluntary) nonparticipation and (involuntary) unemployment are endogenous. The optimal employment tax rate is given by an inverse employment elasticity rule. This rule depends on the...

This paper studies optimal linear and nonlinear redistributive income taxation when there is adverse selection in the labor market. Unlike in standard taxation models, firms do not know workers' abilities and competitively screen them through nonlinear compensation contracts. The equilibrium...

This paper extends the Diamond (1980) model with labor unions to study optimal income taxation and to analyze whether unions can be desirable for income redistribution. Unions bargain with firms over wages in each sector and firms unilaterally determine employment. Unions raise the efficiency...

This paper extends the Diamond (1980) model with labor unions to study optimal income taxation and to analyze whether unions can be desirable for income redistribution. Unions bargain with firms over wages in each sector and firms unilaterally determine employment. Unions raise the efficiency...

During the last decade, several EU countries have tried to tackle unemployment and low activity rates through extensive tax cuts. In an effort to encourage the taking up of work - especially amongst the less productive workers - policymakers have shown increasing interest in targeted tax and...

In this paper, I argue that there is an inefficiently high number of job creators in a model with labour market imperfections and an endogenous decision to become a job creator. I therefore augment the standard labour matching model developed by Mortensen and Pissarides by an endogenous job...

This paper examines efficiency in public input provision in two large jurisdictions with imperfect labour markets. It analyses how equilibrium capital tax rates and public input provision levels differ between asymmetric jurisdictions that can strategically influence the interest rate on the...

This article presents a survey of how optimal income taxation is influenced by labour market considerations. We begin with the standard supply-side optimal income tax model of Mirrlees, and outline the various extensions to that model. We then consider how optimal taxation is affected by various...

We consider the issue of steady-state optimal factor taxation in a Ramsey-type dynamic general equilibrium setting with two distinct distortions: i) taxes on capital and labour are the only available tax instruments for raising revenues, and ii) labour markets are subject to a static...