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Hakki YASICI (Sabanci University) “Taxation, Redistribution and Frictional Labor Supply”

November 19, 2018, 11:15 am - 12:30 pm

Time: 12:15pm – 13:30 pm
Date: 19th of November 2018
Place: Room 3001

Hakki YASICI (Sabanci University) “Taxation, Redistribution and Frictional Labor Supply”

Abstract : We analyze the implications of ex ante dispersion in worker talents and a frictional labor market for the design of tax systems. Our model features on and off the job search, job ladders, job creation, and equilibrium income and profit dispersion within talent markets. In a baseline setting with no talent dispersion, the optimal system consists of an unemployment benefit financed out of a simple lump sum tax on workers. The benefit is high enough to suppress worker income and firm profit dispersion, deter worker poaching and collapse job ladders. With talent dispersion, high benefit levels drive less talented workers out of the market and are prohibitively costly. Active talent markets are frictional. Taxes impact the dispersion of worker incomes and firm profits within these markets. These effects shape and modify conventional optimal tax formulas. Quantitative analysis implies that they create a motive for lower marginal tax rates.


November 19, 2018
11:15 am - 12:30 pm
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Edouard CHALLE
Julien PRAT