Using survey experiments in the United States and Germany with 12,000 participants, we examine perceptions of life expectancy inequality between rich poor people. The is underestimated more than that rich, leading to exaggerated both countries. Receiving accurate information narrows concerns about this inequality. However, impact on policy demand limited because support for policies addressing consistently high, regardless varying We conclude there strong unconditional public health equity policies.

We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule marginal deductions along the income distribution. An immediate implication is recipe designing Pareto-improving reforms. apply our theory and simulate reform that introduces non-care household services (housekeeping, gardening, laundry) in United States. The combines rates between 55% 85% with slight increase rates.

Abstract This article proposes a dynamic Mirrleesian theory of commodity taxation in the presence durable goods. A uniform across all goods is suboptimal even when consumption preferences are separable from labor. If utility function strictly concave and stocks adjustable without friction, investment should be taxed at higher rate than purchase nondurable With adjustment frictions, wedge on depends substitution effects between can positive or negative. An application suggests that housing...

Several frictions restrict the government’s ability to tax assets. First, it is very costly monitor trades on international asset markets. Second, agents can resort nonobservable low-return assets such as cash, gold or foreign currencies if taxes observable become too high. This paper shows that limitations in taxation have important consequences for of labor income. Using a dynamic moral hazard model social insurance, we find optimal income less progressive when governments face taxation....

Moral hazard models with hidden saving decisions are useful to study such diverse problems as unemployment insurance, income taxation, executive compensation, or human capital policies. How can we solve models? In general, this is very difficult. Under the conditions derived in paper, however, replace incentive constraint associated first-order condition. This allows application of simple Lagrangian methods and yields a precise characterization optimal contracts. To obtain tractable for...

We study implications of habit formation for optimal taxation. First, we show that taxation problems with can be analyzed using dynamic programming techniques. Second, derive labor and savings wedges preferences. counteracts the conventional Mirrleesian distortions calls subsidies to supply savings. demonstrate theoretical results are quantitatively important: in a stylized life-cycle model, average fall by more than one third compared time-separable references. Third, exploit analogy...

We analyze Pareto-efficient tax breaks for personal taxation in a private information environment. In addition to labor-leisure choice, the agents decide how spend their money between consumption and work-related goods. derive an efficiency condition that relates rate of deductibility goods marginal at each income level. This holds irrespective skill distribution taste redistribution. If is violated (which it almost generically), we characterize utility-neutral incentive-compatible...

Should Unemployment Insurance Be Asset-Tested? *We study asset-tested unemployment insurance in an incomplete markets model with moral hazard during job search.Asset testing has two counteracting effects on welfare.On the one hand, it improves consumption by introducing state contingent transfers to agents most need.On other worsens problem, since workers have a reduced incentive save and fewer private resources are used for smoothing unemployment.Our results show that realistically...

We study asset-tested unemployment insurance in an incomplete markets model with moral hazard during job search. Asset testing has two counteracting effects on welfare. On the one hand, it improves consumption by introducing state contingent transfers to agents most need. other worsens problem, since workers have a reduced incentive save and fewer private resources are used for smoothing unemployment. Our results show that realistically calibrated of U.S. economy nearly offset each –...

This paper examines the first order approach to moral hazard problems in which agent can secretly save and borrow. The shows that hidden saving constrains concavity of agent's problem even for CARA utility additively separable effort disutility an important way: Consumption second period will be jointly concave if only negative consumption is log-convex effort. We derive two sets sufficient conditions validity this setup. First, we strengthen classic by Mirrlees (1979) Rogerson (1985)....

We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule marginal deductions along the income distribution. An immediate implication is recipe designing Pareto-improving reforms. apply our theory and simulate reform that introduces non-care household services (housekeeping, gardening, laundry) in United States. The combines rates between 55% 85% with slight increase rates.

We analyze Pareto-efficient tax deduction rules for work-related expenses (e.g. housekeeping services, child care or elderly care). Pareto efficiency dictates a tight rule how the rate of deductibility should vary with income and expenditures. An immediate implication is recipe designing Pareto-improving reforms. apply our theory to services in U.S.: Introducing such that between 55% (low expenses) 85% (high can be marginally deducted from taxable yields improvement if combined slight...

This paper proposes a theory of commodity taxation in the presence durable goods. Optimal taxes depend on preference nonseparabilities between and nondurable consumption. In particular, seminal Atkinson-Stigliz result fails differential are optimal even when utility function is separable labor An application to housing decisions implies that should face higher tax rates than Moreover, justifies provisions income code.