Optimal skill distribution under convex skill costs
Leung, Tin Cheuk and Yazıcı, Hakkı (2018) Optimal skill distribution under convex skill costs. Central Bank Review, 18 (1). pp. 29-34. ISSN 1303-0701 (Print) 1305-8800 (Online)
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Official URL: http://dx.doi.org/10.1016/j.cbrev.2017.11.003
This paper studies optimal distribution of skills in an optimal income tax framework with convex skill constraints. The problem is cast as a social planning problem where a redistributive planner chooses how to distribute a given amount of aggregate skills across people. We find that optimal skill distribution is either perfectly equal or perfectly unequal, but an interior level of skill inequality is never optimal.
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