Suchergebnisse

This study analyses the effect of pollution to the optimal taxation and public provision. Environmental deterioration is modelled to be created by a harmful externality of consumption. It is assumed that there are two types of households with high and low productivity, endogenous wages and a government using a mixed taxation scheme. As a result of the asymmetric information the government needs to take the self-selection constraint into account when designing the optimal tax policy. It will be shown that the social valuation of the externality consist of terms indicating the effects directed on consumers, producers, the government and the labour markets respectively. It turns out that in the consumer side the direct effect and the self-selection effect have opposite signs indicating that the environmental and the redistributive objectives are inconsistent. However, in the producer side the direct effect and the indirect effect from wage adjustment in the labour markets have both positive signs indicating consistence between these two goals of the government. Another considerable result comes from the commodity taxation: it is shown that Dixit\'s principle of targeting continues to hold unless the endogeneity assumption is enlarged to apply all factor prices.

We study optimal lifetime redistributive policy in a two-period model where individuals differ in both productivity and future discounting and where their retirement period utility is dependent of the earlier standard of living, i.e. there is a habit formation effect. We consider both welfarist government respecting individual utilities as well as the case where the government aims at correcting the short-sightedness of the individuals. We assume that both gross income and saving are observable. Hence the pension benefits schemes can be based on both gross income and saving of each type. Analytical results depend on the pattern of incentive constraints. The two sources of imperfect information, wage rate and time discounting, interact, so the effects cannot be separated. To consider closer the tax and pension policy and the effect of the degree of habit formation the problem is also solved numerically. We found support for non-linear pension program.

Abstract: In this paper we examine various aspects of the optimal lifetime redistribution policy within a cohort. We characterise optimal redistribution policy when society consists of individuals who do not differ only in productivity, but also in time preference or myopia. We extend Diamond's (2003) analysis on nonlinear taxation of savings into the three and four type models. Our results provide a rationale for distortions (upward and downward) in savings behaviour in a simple two period model where high skilled and low skilled individuals have different non-observable time preferences beyond their earning capacity. If we interpret our model so that there is no private savings, but public provision of pension in period 2, then in different versions (and different parameterization) of three type model we find the U-shaped pattern of the replacement rates. Our numerical results suggest that the retirement consumption is less dispersed than the first period consumption in a paternalistic case, whereas in a welfarist case the ordering is reversed. Our numerical simulations also show that consumption when old should be less dispersed than consumption when young when some individuals are myopic. Moreover our numerical results suggest that when there are myopic individuals in the economy, a paternalistic government policy increases saving and makes saving larger than with paternalist government policy where there are no myopic individuals.

The potential redistributive role of the housing subsidies has got a relatively little attention in the literature. However, non-linear housing subsidy schemes are commonly used by many countries. We consider the question of the optimal tax treatment of housing in a model where agents di¤er in two dimensions; ability and the housing price they face. The problem is also solved numerically. In addition to a general four-type model, we also considered two extensions: endogenously determined housing prices and paternalistic government. The key lesson from the paper is that when individuals differ also in access to housing, the housing subsidy schemes have a redistributive role and they are non-linear. A justification for subsidizing or taxing housing holds also without introducing any merit good argument to the analysis; in the optimal tax model where agents di¤er in their abilities and access to housing it is optimal to tax and subsidize housing, even with separable preferences.