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Author: | Ireland, N. |
Title: | Status-seeking, income taxation and efficiency |
Journal: | Journal of Public Economics
1998 : OCT, VOL. 70:1, p. 99-114 |
Index terms: | INCOME TAX EFFICIENCY ECONOMICS |
Language: | eng |
Abstract: | It is well-known that status-seeking produces distortions in consumption. Competition to achieve status leads to over-consumption of those goods which confer status. It has been found that taxing such goods may even lead to Pareto improvements. In this paper the author extends a model of status, which relies on a signalling equilibrium approach, to include the individual labour supply decision and an income tax. The author shows that a Pareto-improving income tax can exist even with the simplest tax/benefit scheme. |
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