TY  - JOUR
AU  - Boone,Jan
AU  - Bovenberg,Lans
TI  - The Optimal Taxation of Unskilled Labor with Job Search and Social Assistance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9785
PY  - 2003
Y2  - June 2003
UR  - http://www.nber.org/papers/w9785
L1  - http://www.nber.org/papers/w9785.pdf
N1  - Author contact info:
Lans Bovenberg
Tilburg University, P.O. Box 90153
5000 LE Tilburg, The Netherlands
E-Mail: a.l.bovenberg@uvt.nl
AB  - In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal non-linear income taxation in the presence of quasi-linear preferences in leisure by allowing for involuntary unemployment, job search and an exogenous welfare benefit. In trading off low-skilled employment against work effort of higher skilled workers, the government balances distortions on the search margin with those on work effort. Higher welfare benefits typically reduce taxes paid by low-skilled workers and raise marginal tax rates throughout the skill distribution.
ER  -