In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage...

In a recent paper Alesina et al. (2011) construct a model in which different labor supply elasticities for men and women emerge endogenously from intra-household bargaining. In this paper I explore the optimal tax implications of their model in an economy with both singles and couples and...

The paper extends Ng’s (1987) model of optimal taxation of diamond goods — goods that are valued solely for their costliness. We extend his findings by analyzing how other goods should be taxed in the presence of pure diamond goods; modified Ramsey rules are derived in a basic single-type...

The paper extends Ng’s (1987) model of optimal taxation of diamond goods — goods that are valued solely for their costliness. We extend his findings by analyzing how other goods should be taxed in the presence of pure diamond goods; modified Ramsey rules are derived in a basic single-type...

This paper addresses transboundary environmental problems in the context of an optimal tax problem, when part of the labor force is mobile across countries. The policy instruments include both commodity taxation and nonlinear income taxation. We show how the tax policy in a noncooperative...

The paper discusses which redistributional policies are efficient when the identity of the high and low skill persons is private information. Our major purpose is to identify the more efficient policy when, presumably for administrative reasons, the policy option is confined to the choice...

This paper investigates the impact of payroll taxes on unemployment and welfare in a model with household production and union firm wage bargaining. It turns out that unemployment, most likely, falls with a reduced payroll tax in the market sector producing household substitutes (service...

Paternalism, merit goods and specific egalitarianism are concepts we sometimes meet in the literature. The thing in common is that the policy maker does not fully respect the consumer sovereignty principle and design policies according to some other criterion than individuals’ preferences....

We impose a horizontal equity restriction on the problem of finding the optimal utilitarian tax mix. The horizontal equity constraint requires that individuals with the same ability have to pay the same amount of taxes regardless of their preferences for leisure. Contrary to normal findings, we...

This paper develops a Mirrlees (1971) framework with heterogeneous agents to analyze optimal redistributive taxes, optimal provision of public goods and the marginal cost of public funds (MCF). Standard MCF measures are shown to suffer from three defects: i) The MCF for the (non-individualized)...