Leung, Tin Cheuk and Yazici, Hakki (2011): On the Optimal Skill Distribution in a Mirrleesian Economy.
Download (283kB) | Preview
People are heterogenous in the skills by which they turn eort into output. A central question in normative public economics is how to redistribute resources from more- to less-skilled individuals eciently. In addition to income taxation, this paper considers another policy tool of redistribution by allowing planner to choose the dispersion of skill distribution given the average skill level of the economy. We nd that, depending on the parameters of the model, either perfectly unequal skill distribution in which one group has a very high skill level and the rest are completely unskilled, or perfectly equal skill distribution in which all agents have the same skill level, is socially optimal, but an interior level of skill inequality is never optimal. We then provide conditions on the parameters under which perfectly equal and perfectly unequal skill distributions are optimal.
|Item Type:||MPRA Paper|
|Original Title:||On the Optimal Skill Distribution in a Mirrleesian Economy|
|Keywords:||Skill Distribution, Mirrleesian Taxation, Redistribution, Eciency|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue|
|Depositing User:||Unnamed user with email email@example.com|
|Date Deposited:||07. Aug 2011 03:36|
|Last Modified:||21. Feb 2013 07:21|
Boadway, R. W., and P. Pestieau (2006): "Tagging and Redistributive Taxation," Annales d' Economie et de Statistique, (83-84), 123-147.
Bovenberg, A. L., and B. Jacobs (2006): "Redistribtion and Education Subsidies are Siamese Twins," Journal of Public Economics, (85), 2005-2035.
Brett, C., and J. A. Weymark (2008): "Public Good Provision and the Comparative Statics of Optimal Nonlinear Income Taxation," International Economic Review, 49(1), 255-290.
Cremer, H., P. Pestieau, and M. Racionero (2010): "UnequalWages for Equal Utilities," International Tax and Public Finance, forthcoming.
Hamilton, J., and P. Pestieau (2005): "Optimal Income Taxation and the Ability Distribution: Implications for Migration Equilibria," International Tax and Public Finance, 12(1), 29-45.
Hare, P., and D. Ulph (1979): "On Education and Distribution," The Journal of Political Economy, 87(5), 193-212.
Mirrlees, J. A. (1971): "An Exploration in the Theory of Optimal Income Taxation," Review of Economic Studies, 38(114), 175-208.
Naito, H. (1999): "Re-Examination of Uniform Commodity Taxes under a Non-Linear Income Tax System and its Implication for Productive Eciency," Journal of Public Economics, 71, 165-188.
Simula, L. (2007): "Optimality Conditions and Comparative Static Properties of Non-linear Income Taxes Revisited," Paris School of Economics Working Paper, (2007-15).
Stiglitz, J. E. (1982): "Self-Selection and Pareto Ecient Taxation," Journal of Public Economics, 17, 213-240.
Violante, G. L. (2009): "Skill-Biased Technical Change," The New Palgrave Dictionary of Economics.