The Optimal Taxation of Unskilled Labor with Job Search and Social Assistance / Jan Boone, Lans Bovenberg.

Format:

Book

Author/Creator:

Boone, Jan.

Contributor:

National Bureau of Economic Research.

Bovenberg, Lans.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9785.

NBER working paper series no. w9785

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal non-linear income taxation in the presence of quasi-linear preferences in leisure by allowing for involuntary unemployment, job search and an exogenous welfare benefit. In trading off low-skilled employment against work effort of higher skilled workers, the government balances distortions on the search margin with those on work effort. Higher welfare benefits typically reduce taxes paid by low-skilled workers and raise marginal tax rates throughout the skill distribution.

Notes:

Print version record

June 2003.