Program > Papers by author > Neumann Dirk

We study a model in which agents differ in their productive skills and their preferences over labor time/consumption bundles. We assume there is a poverty line, that is, there is a minimal level of consumption below which society finds it unacceptable to let people live. To avoid conflict with individual well-being, we capture the anti-poverty project be requiring redistribution to take place between agents on both sides of the poverty line \emph{provided they have the same labor time}. We combine this requirement with efficiency and robustness requirements to derive social preferences. Maximizing these preferences under incentive compatibility constraints yields the following evaluation criterion: labor income tax schemes should minimize the labor time required to reach the poverty line. We apply this criterion to tax schemes of European countries and the US.