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| Author: | Andersson, F. |
| Title: | Income taxation and job-market signalling |
| Journal: | Journal of Public Economics
1996 : FEB, VOL. 59:2, p. 277-298 |
| Index terms: | TAXATION SIGNALING ECONOMICS |
| Language: | eng |
| Abstract: | This paper develops a model of taxation with asymmetric information between the worker and the employer as well as between the worker and the tax collector. The author shows that if the informational asymmetry in the labour market is solved through signaling, implications for taxation are strong. Taxing the signal directly, as well as imposing a progressive tax on income, are both shown to have favourable welfare consequences locally. In contrast to the results obtained for the progressive income tax, the author shows that taxing the signal directly is likely to reduce other distortions. |
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