Resumen de Optimal Taxation with Entry Barriers
This paper addresses the issue of optimal income taxation in an economy with entry barriers to firms and labor using an infinite horizon general equilibrium approach. The first benchmark model is one with monopolistic competition amongst firms producing a continuum of intermediate input goods, which finds that (i) the optimal labor income tax rate is lower as compared to a competitive market analogue; (ii) the optimal steady state capital income tax rate is nonzero. The second modified model introduces heterogeneity of agent type and entry barriers to private labor in public sector firms, and finds that the optimal sector specific labor income tax rates in this setting clearly suggest a labor income tax trade off between the public and private sectors. For strong (weak) entry barriers the model prescribes a relatively higher (lower) tax on public sector income. The optimal steady state capital income tax rate is nonzero, and its magnitude depends on the elasticity of demand of the publicly produced good.
