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Author: Morten Nyborg Støstad
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper introduces an income inequality externality into the classical optimal non-linear income taxation model, noting that such an externality arises if income inequality affects pertinent societal outcomes. There are two new mathematical terms in the optimal taxation formula, corresponding to a Pigouvian tax and an increased social taste for (in)equality. The two new terms vary more across the distribution than standard externality terms and always influence optimal rates in the same direction at the top of the distribution. As a result, optimal top tax rates are largely driven by the size of the inequality externality. The overall tax schedule is strongly reliant on the type of inequality externality (pre-tax income, post-tax income, utility) and on the externality structure. The findings indicate a new equality-relevant dimension to the optimal policy problem, provide a theoretical basis for previously unsupported tax policies, and show that the size of the inequality externality could be considered a crucial economic variable.
Author: Morten Nyborg Støstad
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper introduces an income inequality externality into the classical optimal non-linear income taxation model, noting that such an externality arises if income inequality affects pertinent societal outcomes. There are two new mathematical terms in the optimal taxation formula, corresponding to a Pigouvian tax and an increased social taste for (in)equality. The two new terms vary more across the distribution than standard externality terms and always influence optimal rates in the same direction at the top of the distribution. As a result, optimal top tax rates are largely driven by the size of the inequality externality. The overall tax schedule is strongly reliant on the type of inequality externality (pre-tax income, post-tax income, utility) and on the externality structure. The findings indicate a new equality-relevant dimension to the optimal policy problem, provide a theoretical basis for previously unsupported tax policies, and show that the size of the inequality externality could be considered a crucial economic variable.
Author: Morten Nyborg Støstad
Publisher:
ISBN:
Category :
Languages : fr
Pages :
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Book Description
Author: Andrew Glyn
Publisher: Institute for Public Policy Research
ISBN: 9781854890597
Category : Political Science
Languages : en
Pages : 268
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Book Description
Examines the relationship between equality and economic efficiency in a number of policy areas. Highlights cases where redistribution of resources would lead to greater economic efficiency. Includes some economic trends in the UK from 1970 to 1992.
Author: Matthew O. Jackson
Publisher: Vintage
ISBN: 1101972963
Category : Social Science
Languages : en
Pages : 354
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Book Description
Here is a fresh, intriguing, and, above all, authoritative book about how our sometimes hidden positions in various social structures—our human networks—shape how we think and behave, and inform our very outlook on life. Inequality, social immobility, and political polarization are only a few crucial phenomena driven by the inevitability of social structures. Social structures determine who has power and influence, account for why people fail to assimilate basic facts, and enlarge our understanding of patterns of contagion—from the spread of disease to financial crises. Despite their primary role in shaping our lives, human networks are often overlooked when we try to account for our most important political and economic practices. Matthew O. Jackson brilliantly illuminates the complexity of the social networks in which we are—often unwittingly—positioned and aims to facilitate a deeper appreciation of why we are who we are. Ranging across disciplines—psychology, behavioral economics, sociology, and business—and rich with historical analogies and anecdotes, The Human Network provides a galvanizing account of what can drive success or failure in life.
Author: Young-Chul Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The quality of one's social network significantly affects his economic success. Even after the skill acquisition period, the social network influences economic success through various routes such as mentoring, job searching, business connections, or information channeling. In this paper I propose that a social network externality which extends beyond the education period - what I call a Lifetime Network Externality - is important in explaining the evolution of between-group inequality in an economy. When the members of a group believe that the quality of their social network will be better in the future, more young group members invest in skill achievement because they expect higher returns on investment realized over the working period. As this is repeated in the following generations, the quality of the group's network improves over time. Combining the Lifetime Network Externality, which operates during the labor market phase of a worker's career, with the traditional concepts of peer and parental effects, which operate during the educational phase (Loury 1977), I suggest a full dynamic picture of group inequality in an economy with multiple social groups. I define a notion of Network Trap, wherein a disadvantaged group cannot improve the quality of its network without a governmental intervention, and I explore the egalitarian policies to mobilize the group out of this trap. This social capital approach suggests a positive effect of equality on economic growth in later stages of economic development and a positive effect of inequality in the early stage of economic development, consistent with Galor and Zeira (1993).
Author: Michael Reich
Publisher: Princeton University Press
ISBN: 1400886112
Category : Social Science
Languages : en
Pages : 359
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Book Description
In an investigation of the effects of racism on the American economy, Michael Reich evaluates the leading economic theories of racial inequality and presents the new theory that discrimination against blacks increases inequality of income among whites. Originally published in 1981. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.
Author: Babatunde Aiyemo
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 236
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Book Description
In this three-part essay, we explore the classical issue of the interplay between inequality and growth and the role of government in the underlying dynamics using modern macroeconomic analytical tools and econometric methods. In the first chapter, we frame the issues within an environment of endogenous labor supply where the government serves as both a facilitator of production and a source of redistribution. Herein we model and numerically simulate the effects on inequality and growth of an expansionary fiscal policy in the harnessing of externalities emanating from productive government capital which is subject to relative congestion. The results from this assessment indicate that congestion accelerates the time-path to steady-state convergence while moderating the distributional consequences of fiscal expansions and strengthening the potential for a tradeoff between instantaneous and long-run policy outcomes. Through numerical simulations we further demonstrate the inability of the capital income tax to ensure redistribution in the long run for significantly high levels of congestion such that the sole possibility for the joint realization of economic growth and decreasing inequality resides in the deployment of a hybrid tax scheme which disproportionately strengthens the return to labor. In the second chapter, we explore the distributional properties of the Barro (1990) model of productive government spending in the presence of endogenous labor, distortionary taxes and congestion externalities. We derive an optimal tax combination and demonstrate the effects on growth and inequality which arise from its enablement in circumstances where the government share is both optimally and sub-optimally determined for varying levels of congestion. Utilizing the endogenous response of labor to capital ownership, we show that depending on the tax regime adopted, a conflict between equity and efficiency exists regardless of whether inequality is evaluated in terms of income or welfare. In the third chapter, we utilize an extensive database to establish the strength of response of poverty to changes in economic growth as being positively influenced by improving institutional indices where poverty is evaluated at the $2.00/day margin. Accordingly, we establish the possibility that the war against poverty can be fought as much by policies that promote growth as by the effectuation of structural reforms which advance healthy economic development.
Author: Babatunde Aiyemo (‡e author)
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 118
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Book Description
In this three-part essay, we explore the classical issue of the interplay between inequality and growth and the role of government in the underlying dynamics using modern macroeconomic analytical tools and econometric methods. In the first chapter, we frame the issues within an environment of endogenous labor supply where the government serves as both a facilitator of production and a source of redistribution. Herein we model and numerically simulate the effects on inequality and growth of an expansionary fiscal policy in the harnessing of externalities emanating from productive government capital which is subject to relative congestion. The results from this assessment indicate that congestion accelerates the time-path to steady-state convergence while moderating the distributional consequences of fiscal expansions and strengthening the potential for a tradeoff between instantaneous and long-run policy outcomes. Through numerical simulations we further demonstrate the inability of the capital income tax to ensure redistribution in the long run for significantly high levels of congestion such that the sole possibility for the joint realization of economic growth and decreasing inequality resides in the deployment of a hybrid tax scheme which disproportionately strengthens the return to labor. In the second chapter, we explore the distributional properties of the Barro (1990) model of productive government spending in the presence of endogenous labor, distortionary taxes and congestion externalities. We derive an optimal tax combination and demonstrate the effects on growth and inequality which arise from its enablement in circumstances where the government share is both optimally and sub-optimally determined for varying levels of congestion. Utilizing the endogenous response of labor to capital ownership, we show that depending on the tax regime adopted, a conflict between equity and efficiency exists regardless of whether inequality is evaluated in terms of income or welfare. In the third chapter, we utilize an extensive database to establish the strength of response of poverty to changes in economic growth as being positively influenced by improving institutional indices where poverty is evaluated at the $2.00/day margin. Accordingly, we establish the possibility that the war against poverty can be fought as much by policies that promote growth as by the effectuation of structural reforms which advance healthy economic development.
Author: Max Lobeck
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
What matters for individuals' preferences for redistribution? In this paper we show that consequentialist beliefs about inequality - beliefs about how economic inequality changes the crime rate or the quality of democratic institutions, for example - have a large causal impact on individuals' redistributive preferences. Using two representative surveys of a combined 6,731 U.S. citizens, we show that a majority of respondents believe that inequality leads to a wide range of negative societal outcomes. We establish a causal link from such beliefs to individuals' redistributive preferences by using exogenously provided video information treatments. With this and other methods we show that inequality externality beliefs impact redistributive preferences on the same order of magnitude as broad economic fairness views. These inequality externality beliefs are relatively equally held across political affiliations as well as incomes. We discuss whether a focus on inequality's consequences could shape a distinct conversation about redistribution.
Author: Matti Tuomala
Publisher: Oxford University Press on Demand
ISBN: 9780198286059
Category : Business & Economics
Languages : en
Pages : 199
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Book Description
This book provides a comprehensive survey of optimal income tax theory, following the development of research strategy from the basic Mirrlees model through to its refinements, examining how optimal tax rates and the shape of tax schedules are affected by new considerations. Optimal taxtheory has an important contribution to make to tax policy formation, and has become especially pertinent in recent years with the renewal of controversy over whether progressive income tax is in fact desirable or not. The author not only covers the historical background and modern formulations of the theory, but extends his discussion to consider the most important extensions of the model and the interrelation of income tax with other instruments of tax and expenditure policy.
