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15:00 | Macro Research Seminar
The University of Bristol, United Kingdom
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Authors: Paweł Doligalski, Abdoulaye Ndiaye, and Nicolas Werquin
Abstract: We study redistributive income taxation when workers have access to private insurance which is constrained by moral hazard. Ex ante heterogenous, risk averse workers contract with risk neutral firms. A worker’s output depends on his effort, his fixed productivity and a stochastic noise. A firm observes its employee’s productivity and output realization, but not his effort. In equilibrium, the firm chooses the wage contract to maximize profits, taking as given the income tax schedule of the worker. Equilibrium wage contracts feature partial insurance: the output risk is partially transmitted to wages to give workers incentives to exert effort. In this environment we derive the sufficient statistics formula for the optimal rate of tax progressivity. In comparison to the economy where wages are exogenously risky, there are three novel effects due to endogenous private insurance: (i) the crowd-out of private insurance by higher progressivity, (ii) the deadweight loss from distorting the variance of wages and (iii) the upward adjustment of the elasticity of effort. All three effects contribute to lower progressivity in the optimum. We also derive the optimal tax formula while allowing for fully non-linear tax schedules and demonstrate how the intuition from the simpler case generalizes.
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Full Text: WILL BE AVAILABLE LATER
16:00 | Special Event
Filip Pertold: "Seniors in the Labor Market" - Week of Science and Technology
As a part of the Week of Science and Technology 2019, researcher and IDEA Think Tank coordinator Filip Pertold is giving a public lecture "Seniors in the Labor Market" on November 14, 15:00, at the seat of the Czech Academy of Sciences.
Click here for more information and registration. Please note, that the lecture is going to be in Czech language.
The Week of Science and Technology, organized by the Czech Academy of Sciences (11-14 November 2019), is the most extensive science festival in the Czech Republic. The program offers more than 500 events all over the Czech Republic. For more information visit www.tydenvedy.cz
