Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Department of Economics, Umeå University Umeå Economic Studies, Department of Economics, Umeå University

No 538:
Optimal Taxation and Risk-Sharing Arrangements in an Economic Federation

Thomas Aronsson () and Magnus Wikström ()

Abstract: This paper analyzes optimal taxation and risk-sharing arrangements in an economy with two levels of government. Both levels provide public goods and finance their expenditures via labor income taxation, where the tax base is responsive to the private agents' labor supply decisions. The localities are assumed to experience different random productivity shocks, meaning hat the private labor supply decisions as well as the choices of income tax rates are carried out under uncertainty. Part of the central overnment's decision problem is then to provide ax revenue sharing between the local governments. The optimal degree of revenue sharing depends on whether or not the localities/regions differ with respect to labor supply incentives.

Keywords: Optimal taxation; multilevel government; fiscal externalities; uncertainty; risk-sharing; (follow links to similar papers)

JEL-Codes: D61; D62; D80; H21; H71; (follow links to similar papers)

24 pages, September 6, 2001

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

DownloadAsset.action?cont ... guageId=3&assetKey=ues538    PDF-file
Download Statistics

Questions (including download problems) about the papers in this series should be directed to David Skog ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:umnees:0538 This page was generated on 2015-09-15 18:07:12