Inequality , Taxation , and Sovereign Default Risk

• 成果类型: Article
• 署名作者: Deng, Minjie
• 署名单位: Simon Fraser University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20210133
• 发表日期: 2024
• 页码: 217-249
• 关键词: income inequality; equilibrium-model; debt

摘要

Income inequality and worker migration significantly affect sovereign default risk . Governments often impose progressive taxes to reduce inequality , which redistribute income but discourage labor supply and induce emigration . Reduced labor supply and a smaller high -income workforce erode the current and future tax base , reducing government's ability to repay debt . I develop a sovereign default model with endogenous nonlinear taxation and heterogeneous labor to quantify this effect . In the model , the government chooses the optimal combination of taxation and debt , considering its impact on workers' labor and migration decisions . Income inequality accounts for one -fifth of the average US state government spread . ( JEL D31, F34, H21, H23, H74, J61, R23 )