Shapiro, JoelUniversitat Pompeu Fabra. Departament d'Economia i Empresa2020-05-252020-05-252001-06-01Journal of Public Economics, Volume 88, Issues 3-4, pp. 465-479, March 2004http://hdl.handle.net/10230/1058A new model of wage dispersion is used to examine welfare aspects of income taxation. The model retains the dynamics of wage posting models while exogenizing search e¤ort, therefore allowing more insight into policy issues. The results highlight effects that standard analyses do not take into account. The optimal income tax should depend on an incidence effect between workers and firms. This incidence effect arises from firms trying to lower wages as much as possible. An employment tax proves, in certain cases, to be the best method to encourage labor force participation.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPaperwage postingoptimal income taxationsearchMicroeconomicsinfo:eu-repo/semantics/openAccess