TY  - JOUR
AU  - Rothschild,Casey
AU  - Scheuer,Florian
TI  - Redistributive Taxation in the Roy Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18228
PY  - 2012
Y2  - July 2012
UR  - http://www.nber.org/papers/w18228
L1  - http://www.nber.org/papers/w18228.pdf
N1  - Author contact info:
Casey Rothschild
Wellesley College
106 Central Street
Wellesley, MA 02481
E-Mail: crothsch@wellesley.edu

Florian Scheuer
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/725-3987
E-Mail: scheuer@stanford.edu
AB  - We consider optimal redistribution in a model where individuals can self-select into one of several possible sectors based on heterogeneity in a multidimensional skill vector. We first show that when the government does not observe the sectoral choice or underlying skills of its citizens, the constrained Pareto frontier can be implemented with a single non-linear income tax. We then characterize this optimal tax schedule. If sectoral inputs are complements, a many-sector model with self-selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single-sector model under natural conditions. However, they are more progressive than in canonical multi-sector economies with discrete types and without occupational choice or overlapping sectoral wage distributions.
ER  -