Optimal redistribution with labor supply dependent productivity

International Tax and Public Finance 2026 Open access

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Authors: Eren Gürer, Alfons J. Weichenrieder
DOI: 10.1007/s10797-026-09981-5
Cited by: 0
References: 7

Abstract

Abstract We study optimal nonlinear income taxation when productivity depends negatively on labor supply (labor-supply-dependent productivity, LSDP). Relative to a benchmark model with fixed productivities, we find that LSDP leads to higher optimal marginal tax rates, especially for higher-income individuals, and greater redistribution. The key mechanism is that, under LSDP, marginal taxation becomes a more effective screening instrument.

Fields of Study & Subjects

Economic Policies and Impacts Fiscal Policy and Economic Growth

Publication details

Journal / source
International Tax and Public Finance
Publisher
Springer Science and Business Media LLC
Publication date
17 June 2026
Language
EN