Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market
2014 (English)Report (Other academic)Text
In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.
Place, publisher, year, edition, pages
Uppsala: Uppsala universitet, 2014. , 17 p.
Working paper / Uppsala Center for Fiscal Studies, Uppsala University, 2014:8
Research subject Economics
IdentifiersURN: urn:nbn:se:lnu:diva-51257OAI: oai:DiVA.org:lnu-51257DiVA: diva2:913789
Working paper2016-03-222016-03-222016-04-22Bibliographically approved