Redistributive Taxation in the Roy Model / Casey Rothschild, Florian Scheuer.

Format:

Book

Author/Creator:

Rothschild, Casey.

Contributor:

National Bureau of Economic Research.

Scheuer, Florian.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18228.

NBER working paper series no. w18228

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

We consider optimal redistribution in a model where individuals can self-select into one of several possible sectors based on heterogeneity in a multidimensional skill vector. We first show that when the government does not observe the sectoral choice or underlying skills of its citizens, the constrained Pareto frontier can be implemented with a single non-linear income tax. We then characterize this optimal tax schedule. If sectoral inputs are complements, a many-sector model with self-selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single-sector model under natural conditions. However, they are more progressive than in canonical multi-sector economies with discrete types and without occupational choice or overlapping sectoral wage distributions.

Notes:

Print version record

July 2012.