Essays on income redistribution and government policy

This dissertation contains four essays. The first essay analyzes the role of trade policies in an open economy for income redistribution and shows that tariffs or production subsidies can Pareto-improve welfare when government uses a Pareto-optimal non-linear income tax system under free trade, contrary to the conventional wisdom in the public finance literature (Diamond and Mirrlees, 1971) and the international trade literature (Dixit and Norman, 1980). That is, tariffs and production subsidies complement a Pareto-efficient non-linear income tax system.;The second essay analyzes a situation of a closed economy. This essay shows that "optimality of uniform commodity taxes under a non-linear income system" by Atkinson and Stiglitz (1976), which suggests that a distortion in commodity markets is not necessary for income redistribution, no longer holds if the production side of an economy is taken into the consideration.;The third essay analyzes the efficiency of decentralized fiscal policies studied in the first essay from the world's point of view. In the recent literature of economic policy, one of the key issues is the "race to the bottom", which suggests the inefficiency of decentralized public policies. In contrast, by using the framework of Diamond and Mirrlees (1971), Mirrlees (1971) and Stiglitz (1982), this essay shows that decentralized fiscal policies in a global economy lead to a world-wide Pareto-efficient tax system. Thus, the result of this paper suggests that international fiscal policy coordination will not be necessary in a world economy.;The fourth essay studies the effect of the tax polices studied in the first essay on welfare. This essay measures the welfare change by a production distortion under a non-linear income tax system by using data on U.S. income tax system. In addition, this essay simulates the Mirrlees's numerical model of the non-linear income tax system by introducing the production side of a economy. This simulation illustrates how the tax system would change when the underlying wage distribution is changed by production distortions.