Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/52046
Authors: 
Jacquet, Laurence
Lehmann, Etienne
van der Linden, Bruno
Year of Publication: 
2011
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5642
Abstract: 
This paper characterizes the optimal redistributive tax schedule in a matching unemployment framework with endogenous (voluntary) nonparticipation and (involuntary) unemployment. The optimal employment tax rate is given by an inverse employment elasticity rule. This rule depends on the global response of the employment rate, which depends not only on the participation (labor supply) responses, but also on the vacancy posting (labor demand) responses and on the product of these two types of responses. For plausible parameters, our matching environment induces much lower employment tax rates than the usual competitive participation model.
Subjects: 
optimal taxation
labor market frictions
unemployment
JEL: 
D82
H21
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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