"Optimal Redistributive Taxation in a Search Equilibrium Model" (with E. Lehmann, A. Parmentier and B. Van der Linden), Review of Economic Studies, forthcoming
(an early version of this paper circulated as "Optimal Income Taxation in an Equilibrium Unemployment Model: Mirrlees meets Pissarides", IRES Discussion Paper 2003-24)
Abstract: This paper characterizes optimal non-linear income taxation in an economy with a continuum of unobservable productivity levels and endogenous involuntary unemployment due to frictions in the labor markets. Redistributive taxation distorts labour demand and wages. Compared to the laisser-faire, gross wages, unemployment and participation are lower. Average tax rates are increasing. Marginal tax rates are positive, even at the top. Finally, numerical simulations suggest that redistribution is much more important in our setting than in a comparable Mirrlees (1971) setting.
“Tax progression and Training in a Matching Framework”, Labor Economics, forthcoming
(a previous version circulated as "Tax Progression and Human Capital in a Matching Framework" as IRES Discussion Paper 2002-40)
Abstract: This paper investigates the effect of tax progression on labour market outcomes in an equilibrium search model with wage bargain and endogenous training decisions. We find that the effect of tax progression on training depends crucially on which party invests and the tax function that is considered. When the firm invests, a higher tax progression may increase training levels. Moreover, when a complete contract is possible or when the firm invests, the optimal tax rate in a model with endogenous human capital is at least as high as in a model with exogenous human capital.
“Les négociations salariales modifient-elles le profil de taxation optimale?” (with E. Lehmann, A. Parmentier and B. Van der Linden), Document de travail ERMES 04-07
Abstract: L’objet de cet article est de comparer les profiles optimaux de taxation optimale non linéaire des revenues du travail selon que les distorsions passent pas l’offre ou la demande de travail. Avec des agents identiques, contrairement au canal de l’offre de travail, la prise en compte de frictions et de salaries négociés n’implique pas des taux marginaux optimaux nuls. Les simulations numériques étalonnées sur la France avec un continuum d’agents aux productivités différentes suggèrent que la redistribution est beaucoup plus importante lorsque les distorsions passent par la demande de travail.
“Tax Progression in Imperfect Labour Markets: A Survey”, IRES Discussion Paper 2004-32
Abstract: We look at the effect of tax progression in imperfect labour markets. The models considered are union models, an equilibrium search model with wage bargaining, an equilibrium search model with wage posting by firms and efficiency wage models. We find that in all basic models, an increase in tax progression leads to lower wages and higher employment. Extensions of the models can however change these results.
“The Impact of Union Power on the Optimal Income Tax Schedule”, IRES Discussion Paper 2004-34
Abstract: We explain the positive correlation between union power and tax progessivity from a normative point of view by integrating labour market frictions and union power in an optimal taxation framework. We find that unions and redistributive taxation are complementary in the sense that they both create inefficiencies that weaken each other. We find that strong unions increase welfare and efficiency when the government faces an adverse selection problem when redistributing income.