Program
Subjects
Works
Book Types
Back to issue
Cover of: Public Input Provision in an Optimal Income Tax Model
Mutsumi Matsumoto

Public Input Provision in an Optimal Income Tax Model

Section: Articles
Volume 58 (2001) / Issue 1, pp. 12-30 (19)
Published 09.07.2018
DOI 10.1628/0015221022905722
  • article PDF
  • available
  • 10.1628/0015221022905722
Due to a system change, access problems and other issues may occur. We are working with urgency on a solution. We apologise for any inconvenience.
Summary
This paper derives and examines the provision rule for public inputs within a two-class framework of optimal income taxation. If income redistribution policies must be designed under a self-selection constraint because the ability of any particular worker is private information, public input provision is used as a means of relaxing this constraint. This use of public inputs for helping income redistribution entails a deviation from the first-best provision rule. The resultant inefficiency is due to the impact of public input provision on the wage differential between workers with different abilities.