Tagging with Leisure Needs

Pestieau, Pierre;Racionero, Maria
(2015) Social Choice and Welfare — Vol. 45, n° 4, p. 687-706 (2015)

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Authors
  • Pestieau, PierreUliège
    Author
  • Racionero, MariaResearch School of Economics, Australian National University
    Author
Abstract
We study optimal redistributive taxes when individuals differ in two characteristics—earning ability and leisure needs—assumed to be imperfectly corre- lated. Individuals have private information about their abilities but needs are observ- able. With different levels of observable needs the population can be separated into groups and needs may be used as a tag. We first assume that the social planner considers individuals should be compensated for their leisure needs and characterize the optimal redistributive policy, and the extent of compensation for needs, with tagging. We also consider an alternative social objective where individuals are deemed responsible for their needs.
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Pestieau, P., & Racionero, M. (2015). Tagging with Leisure Needs. Social Choice and Welfare, 45(4), 687-706. https://doi.org/10.1007/s00355-015-0875-6 (Original work published 2015)