Abstract

http://ssrn.com/abstract=1324424
 
 

References (25)



 


 



Taxation and the Allocation of Talent


Benjamin Lockwood


Harvard University, Department of Economics - Littauer Center

Charles Nathanson


Northwestern University - Kellogg School of Management

E. Glen Weyl


Microsoft Research New England; University of Chicago

June 4, 2015


Abstract:     
Taxation affects the allocation of talented individuals across occupations by blunting material incentives and thus relatively magnifying the non-pecuniary benefits of pursuing a "calling.'' Estimates from the literature suggest that high-paying professions pursued by these individuals have negative externalities while low-paying professions have positive externalities. As a result, a calibrated model indicates that total wealth is maximized by subsidies on middle class incomes and realistic tax rates on the rich. This result is robust to many uncertain features of the environment, though depends crucially on externality estimates and substitution patterns across professions, both of which deserve greater empirical study.

Number of Pages in PDF File: 52

Keywords: occupational choice, allocation of talent, optimal income taxation, Pigouvian taxation, Just Desserts

JEL Classification: D62, H21, H24, J24


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Date posted: January 8, 2009 ; Last revised: June 23, 2015

Suggested Citation

Lockwood, Benjamin and Nathanson, Charles and Weyl, E. Glen, Taxation and the Allocation of Talent (June 4, 2015). Available at SSRN: http://ssrn.com/abstract=1324424 or http://dx.doi.org/10.2139/ssrn.1324424

Contact Information

Benjamin Lockwood
Harvard University, Department of Economics - Littauer Center ( email )
1875 Cambridge Street
Cambridge, MA 02138
United States
Charles Nathanson
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
847-467-5141 (Phone)
HOME PAGE: http://www.charlesnathanson.com
Eric Glen Weyl (Contact Author)
Microsoft Research New England ( email )
One Memorial Drive, 14th Floor
Cambridge, MA 02142
United States
(857) 998-4513 (Phone)
HOME PAGE: http://www.glenweyl.com
University of Chicago ( email )
1126 East 59th Street
Chicago, IL 60637
United States
(773) 702-4862 (Phone)
(773) 702-8490 (Fax)
HOME PAGE: http://www.glenweyl.com
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