The optimal taxation of unskilled labor with job search and social assistance

• 成果类型: Article
• 署名作者: Boone, J; Bovenberg, L
• 署名单位: Tilburg University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2003.05.001
• 发表日期: 2004
• 页码: 2227-2258
• 关键词: labor-market search; social assistance; unemployment; low-skilled labor; nonlinear income taxation; participation margin

摘要

In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal nonlinear 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. (C) 2003 Elsevier B.V. All rights reserved.