Jacquet, Laurence; Lehmann, Etienne; Van der Linden, Bruno - In: Journal of Economic Theory 148 (2013) 5, pp. 1770-1805
We study optimal income taxation when labor supply reacts along the intensive and extensive margins. Individuals are heterogeneous across two unobserved dimensions: their skill and disutility of participation. We develop a new method to analytically derive conditions under which optimal marginal...