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Redistributive unemployment benefit and taxation
journal contribution
posted on 2022-06-21, 09:00 authored by Homa Esfahanian, Ali Moghaddasi-KelishomiAli Moghaddasi-KelishomiThis paper suggests a simple rule which identifies the coordination between optimal unemployment benefits paid and the tax system in the case of risk neutral workers but with moral hazard and hidden information on the worker’s type. Our model posits that, given a universal, linear income tax scheme, the optimal unemployment benefits paid does not depend on workers’ types. Standard government policy pays a positive replacement rate to unemployed workers. Optimal redistribution, taking moral hazard and adverse selection into account, instead suggests that the benefit paid should be the same for all and only depends on the underlying tax structure.
History
School
- Business and Economics
Department
- Business
Published in
The B.E. Journal of Theoretical EconomicsVolume
23Issue
1Pages
327-343Publisher
De GruyterVersion
- VoR (Version of Record)
Rights holder
© Walter de Gruyter GmbH, Berlin/BostonPublisher statement
This paper was published in the journal The B.E. Journal of Theoretical Economics and is available at https://doi.org/10.1515/bejte-2021-0049. The final publication is available at www.degruyter.comAcceptance date
2022-03-13Publication date
2022-06-13Copyright date
2022ISSN
1935-1704Publisher version
Language
- en