TY  - JOUR
AU  - Beaudry,Paul
AU  - Blackorby,Charles
TI  - Taxes and Employment Subsidies in Optimal Redistribution Programs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6355
PY  - 1998
Y2  - January 1998
UR  - http://www.nber.org/papers/w6355
L1  - http://www.nber.org/papers/w6355.pdf
N1  - Author contact info:
Paul Beaudry
Department of Economics
University of British Columbia
Vancouver, Canada
Tel: 604/822-8624
Fax: 604/822-5915
E-Mail: paulbe@interchange.ubc.ca
AB  - This paper characterizes an optimal redistribution program when taxation authorities: (1)" are uninformed about individuals' value of time in both market and non-market activities observe both market-income and time allocated to market employment, and (3) are utilitarian. " Formally, the problem is a special case of a multidimensional screening problem with two" dimensions of unobserved attributes.  In contrast to much of the optimal income taxation" literature, we show that optimal redistribution in this environment involves distorting market" employment upwards for low net-income individuals (through negative marginal income taxes or" employment subsidies) and distorting employment downward for high net-income individuals" (through positive marginal income taxes).  It is also shown that workfare is only part of an" optimal program if certain individuals have not access to market employment."
ER  -