Tagging with leisure needs

Pierre Pestieau, Maria Racionero*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    We study optimal redistributive taxes when individuals differ in two characteristics—earning ability and leisure needs—assumed to be imperfectly correlated. Individuals have private information about their abilities but needs are observable. With different levels of observable needs the population can be separated into groups and needs may be used as a tag. We first assume that the social planner considers individuals should be compensated for their leisure needs and characterize the optimal redistributive policy, and the extent of compensation for needs, with tagging. We also consider an alternative social objective where individuals are deemed responsible for their needs.

    Original languageEnglish
    Pages (from-to)687-706
    Number of pages20
    JournalSocial Choice and Welfare
    Volume45
    Issue number4
    DOIs
    Publication statusPublished - 1 Dec 2015

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