This paper studies optimal taxation of income and education when employers cannot observe workers' productivity and workers signal their productivity to firms by choosing both quantity and quality of education. We characterize constrained efficient allocations and derive conditions under which...

This paper studies optimal taxation of income and education when employers cannot observe workers' productivity and workers signal their productivity to firms by choosing both quantity and quality of education. We characterize constrained efficient allocations and derive conditions under which...

It is widely acknowledged that the quest for social status can result in an inefficient consumption "rat-race" and the existing literature has discussed how taxes can mitigate the associated externalities. We suggest a new reason to tax conspicuous consumption. Our paper highlights that taxing...

We study the joint design of nonlinear income and education taxes when the government pursues redistributive objectives. A key feature of our setup is that the ability type of an agent can affect both the costs and benefits of acquiring education. Market remuneration of agents depends on both...

We analyze optimal redistribution in the presence of labor market signaling where workers' innate productive abilities are neither observed by the government nor by prospective employers. The dual role of income taxation in redistributing income and affecting signaling incentives is analyzed, as...

We study the joint design of nonlinear income and education taxes when the government pursues redistributive objectives. A key feature of our setup is that the ability type of an agent can affect both the costs and benefits of acquiring education. Market remuneration of agents depends on both...

We study the joint design of nonlinear income and education taxes when the government pursues redistributive objectives. A key feature of our setup is that the ability type of an agent can affect both the costs and benefits of acquiring education. Market remuneration of agents depends on both...