Optimal Labour Income Taxation: A Flexible Moral Hazard Approach

• 成果类型: Article; Early Access
• 署名作者: Kocherlakota, Narayana R.
• 署名单位: University of Rochester; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdag046
• 发表日期: 2026
• 关键词: risk

摘要

This article reconsiders the question of optimal labour income taxes for the very rich in the context of a flexible moral hazard model. In this setting, risk is not exogenous. Rather, each agent can affect the probabilities of all possible income outcomes by allocating a fixed time endowment across a variety of distinct tasks. I prove that the optimal income tax rates on high-end earners and the optimal Pareto tail index of the pre-tax labour income distribution are both endogenously determined by agent preferences. In particular, a society with less risk-averse agents will find it optimal to impose a lower tax rate on the rich, even though its members' choices give rise to a smaller Pareto right tail index. In contrast, this kind of negative co-movement between inequality and optimal tax rates is a suboptimal response in the classical Mirrlees (1971)-Diamond (1998)-Saez (2001) setup to changes in the exogenous distribution of skills.