American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Well-Being, Poverty, and Labor Income Taxation: Theory and Application to Europe and the United States
American Economic Journal: Microeconomics
vol. 13,
no. 2, May 2021
(pp. 276–310)
(Complimentary)
Abstract
In a model where agents differ in wages and preferences over labor time–consumption bundles, we study labor income tax schemes that alleviate poverty. To avoid conflict with individual well-being, we require redistribution to take place between agents on both sides of the poverty line provided they have the same labor time. This requirement is combined with efficiency and robustness properties. Maximizing the resulting social preferences under incentive compatibility constraints yields the following evaluation criterion: tax schemes should minimize the labor time required to reach the poverty line. We apply this criterion to European countries and the United States.Citation
Maniquet, François, and Dirk Neumann. 2021. "Well-Being, Poverty, and Labor Income Taxation: Theory and Application to Europe and the United States." American Economic Journal: Microeconomics, 13 (2): 276–310. DOI: 10.1257/mic.20180269Additional Materials
JEL Classification
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- I31 General Welfare; Well-Being
- I32 Measurement and Analysis of Poverty
- J22 Time Allocation and Labor Supply
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