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 … capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results …

This paper analyzes optimal linear taxes on labor income and savings in a standard two-period life-cycle model with … more attractive for social insurance if a larger part of risk is realized in the first period of the life-cycle. Our …-age individuals. -- optimal capital taxation ; risk ; Atkinson-Stiglitz theorem …

risky labour-market outcomes, adverse selection, moral hazard and risk aversion. The model combines structured student loans … (redistribution). In separating optima, the talented types bear more risk than the less-talented ones; they arise only if the social …