UNDERSTANDING THE EVOLUTION OF INEQUALITY DURING TRANSITION: THE OPTIMAL INCOME TAXATION

摘要: What explains the spectacular increases in inequality of disposable income transitional economies Central and Eastern Europe? There are at least two possible explanations. First, pre-tax distribution became more unequal because shift to a market economy. Second, degree progressivity tax system declined. But each these factors is turn determined by other structural changes associated with transition-notably, decrease public provision key goods, non revenue sources such as profits from production, perhaps decline society's aversion. This paper develops framework which different forces on can be assessed. Using simple two-type two-sector optimal model endogenous wages, we first all show that goods could indeed lead increasing "inherent" inequality, words incomes. It then deploys Mirrlees non- linear taxation assess relative impacts this increase inherent decreasing revenue, declines aversion; get numerical feel for their inequality.