01244nam a22001457a 4500 525948 525948 240426b ||||| |||| 00| 0 eng d Deng, Minjie 51900 Inequality, taxation, and sovereign default risk American Economic Journal: Microeconomics 16(2), Apr, 2024: p.217-249 Income inequality and worker migration significantly affect sovereign default risk. Governments often impose progressive taxes to reduce inequality, which redistribute income but discourage labor supply and induce emigration. Reduced labor supply and a smaller high-income workforce erode the current and future tax base, reducing government's ability to repay debt. I develop a sovereign default model with endogenous nonlinear taxation and heterogeneous labor to quantify this effect. In the model, the government chooses the optimal combination of taxation and debt, considering its impact on workers' labor and migration decisions. Income inequality accounts for one-fifth of the average US state government spread. –Reproduced https://www.aeaweb.org/articles?id=10.1257/mac.20210133 American Economic Journal: Microeconomics INCOME INEQUALITY AR 0 0 ddc 0 0 401002 IIPA IIPA 2024-04-26 16(2), Apr, 2024: p.217-249 AR131741 2024-04-26 AR