TY  - RPRT
        AU  - Kroft, Kory
AU  - Kucko, Kavan
AU  - Lehmann, Etienne
AU  - Schmieder, Johannes F.
        TI  - Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach
        PY  - 2016/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 9719
        UR  - https://www.iza.org/publications/dp9719
        AB  - We derive a sufficient statistics optimal tax formula in a general model that incorporates unemployment and endogenous wages, to study the shape of the tax and transfer system at the bottom of the distribution. The sufficient statistics are the macro employment response to taxation and the micro and macro participation responses. We estimate these statistics using policy variation from the U.S. tax and transfer system. Our results suggest that the optimal tax more closely resembles a Negative Income Tax than an Earned Income Tax Credit relative to the case where unemployment and wage responses are not taken into account.
        KW  - labor supply
KW  - optimal income taxation
KW  - labor demand
        ER  -