Optimal redistribution with hetrogeneous preferences for leisure

Boadway, Robin, Marchand, Maurice, Pestieau, Pierre and Racionero, Maria del Mar 2002, Optimal redistribution with hetrogeneous preferences for leisure, Journal of public economic theory, vol. 4, no. 4, pp. 475-498.

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Title Optimal redistribution with hetrogeneous preferences for leisure
Author(s) Boadway, Robin
Marchand, Maurice
Pestieau, Pierre
Racionero, Maria del Mar
Journal name Journal of public economic theory
Volume number 4
Issue number 4
Start page 475
End page 498
Publisher Wiley-Blackwell Publishing, Inc.
Place of publication Hoboken, NJ
Publication date 2002-10
ISSN 1097-3923
Summary This paper examines the properties of the optimal nonlinear income tax when preferences are quasi–linear in leisure and individuals differ in their ability and their preferences for leisure. The government seeks to redistribute income. It can perfectly observe the level of endogenous income but cannot observe either ability or preferences. The heterogeneity of preferences leads to problems of comparability between individual utilities which challenge the design of redistributive schemes. We analyze the consequences of adopting a utilitarian social welfare function where the government is allowed to give different weights to individuals with different preferences. Under this particular social objective and given the quasi–linearity of preferences, we are able to obtain closed–form solutions for the marginal tax rates and to examine the progressivity of the tax system according to the weights used.
Language eng
Field of Research 140299 Applied Economics not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2002, Blackwell Publishing, Inc
Persistent URL http://hdl.handle.net/10536/DRO/DU:30008496

Document type: Journal Article
Collections: Faculty of Business and Law
School of Economics
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