Weak redistribution and certainty equivalent domination

Journal article: We assess optimal deterministic nonlinear income taxation in a Mirrlees economy with a continuum of risk‐averse agents whose utilities are quasilinear in labor. A weak redistribution motive makes random taxes more likely socially dominated by the deterministic policy where after‐tax income lotteries are replaced with their certainty equivalents.

Author(s)

Stéphane Gauthier, Guy Laroque

Journal
  • Journal of Public Economic Theory
Date of publication
  • 2024
Keywords
  • Asymmetric information
  • Certainty equivalent
  • Random taxes
  • Redistribution
Version
  • 1
Volume
  • 26