Labor supply, uncertainty, and efficient taxation

Jonathan W. Eaton, Harvey S. Rosen

Research output: Contribution to journalArticle

70 Citations (Scopus)

Abstract

We analyze the structure of an optimal linear income tax when workers are uncertain about their wages at the time they choose their labor supplies. Background for the normative analysis is provided by an outline of the positive theory of wage taxation and labor supply under uncertainty. It is then shown that given imperfect information about wages, lump-sum taxation is not necessarily efficient. Because a wage tax reduces the riskiness of wage income, some combination of a lump-sum tax and a wage tax generally will minimize excess burden.

Original languageEnglish (US)
Pages (from-to)365-374
Number of pages10
JournalJournal of Public Economics
Volume14
Issue number3
DOIs
StatePublished - Jan 1 1980

Fingerprint

Labor supply
Supply uncertainty
Wages
Taxation
Tax
Riskiness
Income
Excess burden
Income tax
Uncertainty
Workers
Imperfect information

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

Eaton, Jonathan W. ; Rosen, Harvey S. / Labor supply, uncertainty, and efficient taxation. In: Journal of Public Economics. 1980 ; Vol. 14, No. 3. pp. 365-374.
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Labor supply, uncertainty, and efficient taxation. / Eaton, Jonathan W.; Rosen, Harvey S.

In: Journal of Public Economics, Vol. 14, No. 3, 01.01.1980, p. 365-374.

Research output: Contribution to journalArticle

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