Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/320087 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11866
Publisher: 
CESifo GmbH, Munich
Abstract: 
This study examines optimal government redistribution in a Mirrleesian framework, accounting for a negative effect of longer working hours on productivity. A government ignoring this effect perceives labor supply as insufficient and sets lower marginal income taxes to encourage work. In contrast, a government recognizing the endogenous relationship between productivity and labor supply redistributes more. However, the resulting marginal taxes are still lower than those predicted by standard models where productivity is independent of working hours.
Subjects: 
working hours
productivity
optimal redistribution
self-confirming policy equilibrium.
JEL: 
H21
H31
Document Type: 
Working Paper
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