Angelopoulos, K. , Fernandez, B. X. and Malley, J. R. (2014) The distributional consequences of tax reforms under capital-skill complementarity. Economica, 81(324), pp. 747-767. (doi: 10.1111/ecca.12087)
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Abstract
This paper analyses wage inequality and the welfare effects of changes in capital and labour income tax rates for different types of agents. To achieve this, we develop a model that allows for capital–skill complementarity given non-uniform distributions of asset holdings and labour skills. We find that capital tax reductions lead to the highest aggregate welfare gains but are skill-biased and thus increase inequality. However, our analysis also shows that the inequality effects of capital tax reductions are lower over the transition period compared with the long run.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Malley, Professor Jim and Angelopoulos, Professor Konstantinos |
| Authors: | Angelopoulos, K., Fernandez, B. X., and Malley, J. R. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Economica |
| Publisher: | Wiley |
| ISSN: | 0013-0427 |
| ISSN (Online): | 1468-0335 |
| Copyright Holders: | Copyright © 2014 The London School of Economics and Political Science |
| First Published: | First published in Economica 81(324):747-767 |
| Publisher Policy: | Reproduced in accordance with the copyright policy of the publisher |
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