TY  - RPRT
        AU  - Jacquet, Laurence
AU  - Lehmann, Etienne
AU  - Linden, Bruno Van der
        TI  - Optimal Redistributive Taxation with Both Labor Supply and Labor Demand Responses
        PY  - 2011/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5642
        UR  - https://www.iza.org/publications/dp5642
        AB  - This paper characterizes the optimal redistributive tax schedule in a matching unemployment framework with endogenous (voluntary) nonparticipation and (involuntary) unemployment. The optimal employment tax rate is given by an inverse employment elasticity rule. This rule depends on the global response of the employment rate, which depends not only on the participation (labor supply) responses, but also on the vacancy posting (labor demand) responses and on the product of these two types of responses. For plausible parameters, our matching environment induces much lower employment tax rates than the usual competitive participation model.
        KW  - unemployment
KW  - labor market frictions
KW  - optimal taxation
        ER  -