Redistributive Taxation and Social Insurance
INTERNATIONAL TAX AND PUBLIC FINANCE, Vol. 3, No. 3, 1996
Posted: 4 May 1998
Abstract
This paper studies the role of social insurance as a redistributive mechanism in the presence of an optimal (linear or general) income tax. It considers a second-best setting with two unobservable individual characteristics: ability, measured by the wage rate, and risk, measured by the probability of incurring a loss. It shows that both tax progressivity and the optimal level of social insurance crucially depend on the correlation between ability and risk.
JEL Classification: H24, H23
Suggested Citation: Suggested Citation
Cremer, Helmuth and Pestieau, Pierre, Redistributive Taxation and Social Insurance. INTERNATIONAL TAX AND PUBLIC FINANCE, Vol. 3, No. 3, 1996, Available at SSRN: https://ssrn.com/abstract=4091
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