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Diversity and Economic Performance in a Model with Progressive Taxation

journal contribution
posted on 16.04.2020 by MH Suen, W Wang
Is a more heterogeneous population beneficial or harmful to long-term economic performance? This article addresses this and other questions in a dynamic general equilibrium model where consumers differ in their labour productivity and time preference. We show how differences in the cross-sectional distribution of these characteristics can affect the economy via two channels. The first one involves changing the composition of the labour force; and the second one involves changing the cross-sectional distribution of the marginal tax rate. We show how these channels are, respectively, determined by the shape of the labour supply function and the curvature of the marginal tax function.
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Funding

Wei Wang would also like to acknowledge the support from the National Natural Science Foundation of China under Grant Number 71803153.

History

Citation

The Economic Journal, Volume 129, Issue 623, October 2019, Pages 2949–2977, https://doi.org/10.1093/ej/uez016

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/School of Business

Version

AM (Accepted Manuscript)

Published in

The Economic Journal

Volume

129

Issue

623

Pagination

2949–2977

Publisher

Oxford University Press (OUP), Royal Economic Society

eissn

1468-0297

Acceptance date

21/08/2018

Copyright date

2019

Available date

16/05/2019

Publisher version

https://academic.oup.com/ej/article/129/623/2949/5490323

Language

en

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