Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75493
Authors: 
Corneo, Giacomo
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 364
Abstract: 
This paper examines the allocative implications of progressive income taxation when individuals care about their relative income. It shows that tax progressivity might improve efficiency, and the more so in egalitarian economies. Introducing a progressive income tax can yield a Pareto improvement if pre-tax income is evenly distributed. Implementing undistorted choices of working hours requires a progressive tax schedule, and the optimal degree of progressivity decreases with pre-tax income inequality.
Subjects: 
Progressive income tax
inequality
social status
Document Type: 
Working Paper

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