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Comparative Statics of Optimal Nonlinear Income Taxation with a Publicly Provided Input and a Nonlinear Production Technology
Author(s) -
BRETT CRAIG,
WEYMARK JOHN A.
Publication year - 2013
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12037
Subject(s) - comparative statics , economics , endogeneity , nonlinear system , production (economics) , income tax , schedule , econometrics , microeconomics , wage , labour economics , public economics , physics , management , quantum mechanics
Comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs a redistributive income tax schedule and provides a public input for a nonlinear production technology. These assumptions imply that wage rates are endogenous. The endogeneity of the wages necessitates taking account of general equilibrium effects of changes in the parameters of the model that are not present when the technology is linear.