Arbeitspapier

Unemployment Benefits and Optimal Non-Linear Income Taxation

This paper explores the rationale for unemployment benefits as a complement to optimal non-linear income taxation. High-skilled workers and low-skilled workers face different exogenous risks of being unemployed. As long as the low-skilled workers face a higher unemployment risk, we find that there is a case for over-insuring the low-skilled, hence the unemployment benefits of the low-skilled should be higher than the pure insurance purpose would prescribe. This effect is likely to prevail in a model with a more realistic treatment of the labor market.

Language
Englisch

Bibliographic citation
Series: Working Paper ; No. 2003:3

Classification
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Time Allocation and Labor Supply
Labor Contracts
Unemployment: Models, Duration, Incidence, and Job Search
Subject
Optimal non-linear income taxation
unemployment benefits
Arbeitslosenversicherung
Einkommensteuer
Optimale Besteuerung
Theorie

Event
Geistige Schöpfung
(who)
Engström, Per
Event
Veröffentlichung
(who)
Uppsala University, Department of Economics
(where)
Uppsala
(when)
2003

Handle
URN
urn:nbn:se:uu:diva-4455
Last update
20.09.2024, 8:21 AM CEST

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Object type

  • Arbeitspapier

Associated

  • Engström, Per
  • Uppsala University, Department of Economics

Time of origin

  • 2003

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