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Optimal Dynamic Taxes / Mikhail Golosov, Maxim Troshkin, Aleh Tsyvinski.
- Format:
- Book
- Author/Creator:
- Golosov, Mikhail.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w17642.
- NBER working paper series no. w17642
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- We study optimal labor and savings distortions in a lifecycle model with idiosyncratic shocks. We show a tight connection between its recursive formulation and a static Mirrlees model with two goods, which allows us to derive elasticity-based expressions for the dynamic optimal distortions. We derive a generalization of a savings distortion for non-separable preferences and show that, under certain conditions, the labor wedge tends to zero for sufficiently high skills. We estimate skill distributions using individual data on the U.S. taxes and labor incomes. Computed optimal distortions decrease for sufficiently high incomes and increase with age.
- Notes:
- Print version record
- December 2011.
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