Since 2002 the German government has promoted private retirement saving plans by means of special subsidies and tax incentives: the Riester scheme. This policy mainly targets low-income households. Using data from the German Socio-economic Panel, we scrutinize the impact of the Riester scheme on...

This paper analytically derives optimal top marginal tax rates when couples are taxed according to income splitting between spouses, consumption is taxed, and the skill distribution is unbounded. Optimal top marginal income tax rates are then quantified for Germany. Estimation results based on...

Why do capital taxes still exist in an integrated world economy? When capital is perfectly mobile across countries and labour is fixed, a source-based tax on capital both reduces and redistributes world income. In a simple general equilibrium model we show that under plausible circumstances...

The transition from an oil-based to a knowledge-based economy requires that the Saudi population dramatically increases its level of human capital. This paper argues that noncognitive skills may be a bottleneck in the formation of human capital and proposes a policy to indirectly strengthen...

Studying lifetime income inequality for individuals who belong to the same cohort can contribute valuable insights that cannot be obtained by usual analyses of annual incomes. Data from the social security system indicates that in West Germany, over the cohorts born between 1935 and 1972,...

Does redistribution in democracies cater to the will of the majority? We propose a direct empirical strategy based on survey data that needs not assume that voters are guided by pecuniary motives alone. We find that most democracies implement the median voter’s preferred amount of...

We employ German social security records to investigate intragenerational lifetime earnings inequality and mobility of yearly earnings for 35 cohorts, starting with the birth year 1935. Our main result is a striking secular rise of intragenerational inequality in lifetime earnings: West German...