Collaborative Proposal: Designing Taxes that Improve Insurance to Earnings Uncertainty over the Life Cycle

对于一个进入劳动力市场的25岁年轻人来说，前景肯定充满了不确定性。他们是会相对较快地找到一份好工作，还是会在一开始就从一份工作跳到另一份工作，寻找一份合适的工作？他们能找到哪些在职培训和其他形式的技能积累的机会？他们将如何利用这些机会？它们到底有多好？它们会涨到多高？他们会在公司或行业内稳步发展，还是会被解雇，不得不在其他地方重塑自我？由于所有这些原因，年轻的工人一定会发现很难预测他们在50岁时能挣多少钱。更普遍的是，大量的实证研究已经证明，个人在其一生的收入中面临着重大的不确定性（例如，参见Storesletten， Telmer, and Yaron（2004）最近的一项研究）。这种终生收入的巨大不确定性使得社会保险发挥了重要作用。在发达国家，社会保险在很大程度上是通过税收制度提供的，作为社会保险的一种工具，对劳动和资本收入征税，并为各种形式的转移支付提供资金。经济理论对这种方法有什么看法？它如何帮助指导这种方法的设计？该提案的目标是发展简单而有力的见解，以构建能够很好地为生命周期中的特殊风险提供保险的税收体系。米尔顿·弗里德曼（Milton Friedman）的早期著作认为，税收应该在提供社会保险方面发挥重要作用。在弗里德曼（1962）中，他提出了一种“负所得税”，即收入足够低的个人将欠负税，从而收取转移支付。特别是，他提倡一种简单的制度，其中对收入的恒定边际税与一次性退税相结合，从而产生具有负截距的线性税收函数（Sheshinski 1972）。对于税前收入的给定分配，这种税收减少了税后收入的分散，从而实现了更公平的结果。Mirrlees的开创性工作（Mirrlees 1971）通过允许完全非线性的收入税收来完善这一想法。从那时起，除了少数值得注意的例外，最优税收理论主要适用于静态模型（例如Diamond 1998； Saez 2001）。静态模型的经验教训如何与实际工作者面临的动态问题相关？或者更好的是，我们如何将最优税收模型扩展到动态环境中，以考虑到工人面临的不确定性和动态？这个问题最近激发了人们对研究更现实的动态环境的兴趣（参见Golosov， Tsyvinski, and Werning 2006，以及其中的参考文献）。由于这些模型存在许多技术上的困难，人们对如何以最佳方式设计税收知之甚少。在Farhi和Werning（2010）中，我们从理论上和定量上描述了这种动态环境下税收的最佳设计。我们显示了税收与年龄有关的重要作用。因为最优的税收制度需要复杂的税收工具，我们也考虑简单的税收制度。特别是，我们发现米尔顿·弗里德曼的“负所得税”的简单概括几乎和最优税收制度一样好。它结合了一次性退税和对劳动力的线性税收，随着年龄的增长而增加，直到退休。在我们提出的研究中，我们计划完成这项工作，并研究以下内容。首先，我们希望大大扩展数值模拟的范围。这些模拟要求很高，需要使用现代并行计算方法。我们计划设计程序和算法，以允许更广泛的场景集，关于工人的偏好和行为，以及他们面临的不确定性过程。其次，我们要丰富研究，考虑人力资本积累，在工作和学校。这使得进入劳动力市场的年龄成为一种选择，而不是给定的。第三，我们还想考虑退休的决定，并分析其对最优税收和社会保障体系的影响。最后，我们想扩展我们的分析，纳入一般均衡的考虑。我们在Farhi和Werning（2010）中提供的处理基本上是在给定利率下的部分均衡。正如我们在之前的工作中所显示的那样（Farhi和Werning 2008,2009），考虑到对利率的影响在评估税收制度时可能很重要。

To a twenty five year old entering the labor market, the landscape must feel full of uncertainties. Will they land a good job relatively quickly or will they initially bounce from one job to another in search of a good match? What opportunities for on-the-job training and other forms of skill accumulation will they find? How well will they take advantage of these opportunities? Just how good are they? How high will they rise?Will they advance steadily within a firm or industry, or be laid off and have to reinvent themselves elsewhere? For all these reasons, young workers must find it challenging to predict how much they will be making at, say, age fifty. More generally, an ample body of empirical research has documented that individuals face significant uncertainty in their lifetime earnings (see for example Storesletten, Telmer, and Yaron (2004) for a recent study).This considerable uncertainty in lifetime earnings generates an important role for social insurance. In advanced countries, social insurance is to a large extent provided through the tax system as a tool for social insurance, taxing both labor and capital income, and financing various forms of transfers. What does economic theory say about this approach and how can it help guide its design? The goal of this proposal is to develop simple and robust insights to construct tax systems that do a good job of insuring idiosyncratic risks over the life cycle.Early writings by Milton Friedman argued that taxes should play an important role in the provision of social insurance. In Friedman (1962), he proposed a "negative income tax" where individuals with low enough income would owe a negative tax, and thus collect transfers. In particular, he advocated a simple system where a constant marginal tax on income is combined with a lump sum rebate -- resulting in a linear tax function with a negative intercept (Sheshinski 1972). For a given distribution of before-tax income, such a tax reduces the dispersion in after-tax income, thus achieving a more equitable outcome.Mirrlees' seminal work (Mirrlees 1971) refined this idea by allowing for fully non-linear taxation of income. Since then, with a few notable exceptions, optimal tax theory has mostly worked with a static model (e.g. Diamond 1998; Saez 2001). How are the lessons from the static models relevant for the dynamic problem faced by actual workers? Or better, how can we extend optimal tax models to dynamic settings to take into account the uncertainty and dynamics faced by workers? This question has recently spurred interest in studying more realistic dynamic settings (see Golosov, Tsyvinski, and Werning 2006, and the references therein). Because these models present a number of technical difficulties, relatively little is known how taxes should optimally be designed.In Farhi and Werning (2010), we characterize theoretically and quantitatively the optimal design of taxes in such a dynamic setting. We show an important role for taxes to depend on age. Because the optimal tax system requires sophisticated tax instruments, we also consider simpler tax systems. In particular, we find that simple generalizations of Milton Fridman's "negative income tax" perform almost as well as the optimal tax system. It combines a lump-sum rebate with linear taxes on labor that increase with age until retirement.In our proposed research, we plan to complete this work and also research the following. First, we would like to considerably extend the scope of our numerical simulations. These simulations are demanding, requiring the use of modern parallel computing methods. We plan to devise programs and algorithms to allow a wider set of scenarios, regarding worker preferences and behavior as well as the process for uncertainty they face. Second, we would like to enrich the study to consider human capital accumulation, on the job and at school. This makes the age of entry into the labor market a choice, instead of a given. Third, we would also like to allow for a decision to retire and analyze its effects on the optimal tax and social security system. Finally, we would like to extend our analysis to incorporate general equilibrium considerations. The treatment that we provide in Farhi and Werning (2010) is essentially in partial equilibrium at a given interest rate. As we have shown in previous work (Farhi and Werning 2008, 2009), taking into account the effects on interest rates may be important in evaluating tax systems.