Transitional impact of environmental policy in an endogenous growth model

Growth Models;Environmental Policy;environmental economics

Optimal Taxation and Social Insurance in a Lifetime Perspective

Advances in information technology have improved the administrative feasibility of redis- tribution based on lifetime earnings recorded at the time of retirement. We study optimal lifetime income taxation and social insurance in an economy in which redistributive taxation and social insurance serve to insure (ex ante) against skill heterogeneity as well as disability risk. Optimal disability benefits rise with previous earnings so that public transfers depend not only on current earnings but also on earnings in the past. Hence, lifetime taxation rather than annual taxation is optimal. The optimal tax-transfer system does not provide full disability insurance. By offering imperfect insurance and structuring disability benefits so as to enable workers to insure against disability by working harder, social insurance is designed to offset the distortionary impact of the redistributive labor income tax on labor supply.Optimal lifetime income taxation;optimal social insurance

The Optimal Taxation of UnskilIed Labor with Job Search and Social Assistance

In order to explore the optimal taxation of low-skilled labor, we extend the standard model of optimal non-linear income taxation in the presence of quasi-linear preferences in leisure by allowing for involuntary unemployment, job search, an exogenous welfare benefit, and a non-utilitarian social welfare function.In trading off more low-skilled employment against more work effort of higher skilled workers, the government balances distortions on the search margin with those on work effort.Positive marginal tax rates at the bottom may help to encourage job search if this search is taxed on a net basis.Lower welfare benefits and search costs tend to reduce marginal tax rates throughout the skill distribution.social welfare;job search;unemployment;income tax;unskilled workers

The Life Cycle of the Firm with Debt and Capital Income Taxes

This paper analyses the impact of capital income taxes on financial and investment decisions of corporations.Extending Sinn's (1991) nucleus theory of the firm with debt finance, the model determines the optimal sources of finance (debt, newly issued equity or retained earnings), the optimal use of the investment's earnings (dividends, retentions, interest payments or debt redemption), and the optimal capital accumulation throughout the life cycle of the firm.tax burden;capital income taxation;firm behaviour

Pension Systems and the Allocation of Macroeconomic Risk

This paper explores the optimal risk sharing arrangement between generations in an overlapping generations model with endogenous growth.We allow for nonseparable preferences, paying particular attention to the risk aversion of the old as well as overall "life-cycle" risk aversion.We provide a fairly tractable model, which can serve as a starting point to explore these issues in models with a larger number of periods of life, and show how it can be solved.We provide a general risk sharing condition, and discuss its implications.We explore the properties of the model quantitatively.Among the key findings are the following.First and for reasonable parameters, the old typically bear a larger burden of the risk in productivity surprises, if old-age risk-aversion is smaller than life risk aversion, and vice versa.Thus, it is not necessarily the case that the young ensure smooth consumption of the old.Second, consumption of the young and the old always move in the same direction, even for population growth shocks.This result is in contrast to the result of a fully-funded decentralized system without risk-sharing between generations.Third, persistent increases in longevity will lead to lower total consumption of the old (and thus certainly lower per-period consumption of the old) as well as the young as well as higher work effort of the young.The additional resources are instead used to increase growth and future output, resulting in higher consumption of future generations.social optimum;pensions systems;risk sharing;overlapping

Why is capital so immobile internationally?: Possible explanations and implications for capital income taxation

Capital Movements;Income Tax;Information;Open Economy

Environmental quality and pollution-saving technological change in a two-sector endogenous growth model

Environment;Technological Change;Growth Models;Pollution;Sustainable Development