Optimal age-dependent income taxation in a dynamic extensive model: The case for negative participation tax on young people

Takao Kataoka, Yoshihiro Takamatsu

研究成果: Article査読

抄録

We consider optimal age-dependent income taxation in a dynamic model where the labor-leisure choice is the extensive margin, each household faces idiosyncratic shocks to labor productivity and a pecuniary cost to work, and there is no insurance market against the shocks. We show that the well-known property of the optimal participation tax rate in the static model continues to hold in our dynamic economy, that is, the participation tax rates for some income groups with low consumption are likely negative. In dynamic models, the optimal participation tax rate depends on age and on labor income. Our numerical simulations suggest that a negative participation tax should be restricted to young households.

本文言語English
ページ(範囲)1338-1367
ページ数30
ジャーナルJournal of Public Economic Theory
22
5
DOI
出版ステータスPublished - 2020 9 1

ASJC Scopus subject areas

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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