Electoral Competition and Negative Taxation: The Informational Inactivity Trap
Straeten, Karine Van der
Electoral Competition and Negative Taxation: The Informational Inactivity Trap - 2002.
84
The tax burden on labour can weigh on the economy not only in terms of underemployment and reduced growth, but there is also a danger of an informational shortfall. While it is difficult to obtain information on the productive capacities of non-employed individuals, taxation, by depressing employment, will reduce the information available to society about itself. The authors take a dynamic model in which tax policy in each period is chosen by voting. Voters’beliefs regarding the productivity distribution determine tax policy, which in turn determines employment, which in turn determines voters’revised beliefs. At steady state, the tax rate and the non-employment rate are at least as high as they would have been if the productivity distribution had been known with certainty at the start.
Electoral Competition and Negative Taxation: The Informational Inactivity Trap - 2002.
84
The tax burden on labour can weigh on the economy not only in terms of underemployment and reduced growth, but there is also a danger of an informational shortfall. While it is difficult to obtain information on the productive capacities of non-employed individuals, taxation, by depressing employment, will reduce the information available to society about itself. The authors take a dynamic model in which tax policy in each period is chosen by voting. Voters’beliefs regarding the productivity distribution determine tax policy, which in turn determines employment, which in turn determines voters’revised beliefs. At steady state, the tax rate and the non-employment rate are at least as high as they would have been if the productivity distribution had been known with certainty at the start.
Réseaux sociaux