Essays in dynamic optimal taxation: working experience, unemployment scarring and poverty

This thesis investigates the design of optimal tax systems in dynamic environments. The first essay characterizes the optimal tax system where wages depend on stochastic shocks and work experience. In addition to redistributive and efficiency motives, the taxation of inexperienced workers depends on a second-best requirement that encourages work experience, a social insurance motive and incentive effects. Calibrations using U.S. data yield higher expected optimal marginal income tax rates for experienced workers for most of the inexperienced workers. They confirm that the average marginal income tax rate increases (decreases) with age when shocks and work experience are substitutes (complements). Finally, more variability in experienced workers' earnings prospects leads to increasing tax rates since income taxation acts as a social insurance mechanism. In the second essay, the properties of an optimal tax system are investigated in a dynamic private information economy where labor market frictions create unemployment that destroys workers' human capital. A two-skill type model is considered where wages and employment are endogenous. I find that the optimal tax system distorts the first-period wages of all workers below their efficient levels which leads to more employment. The standard no-distortion-at-the-top result no longer holds due to the combination of private information and the destruction of human capital. I show this result analytically under the Maximin social welfare function and confirm it numerically for a general social welfare function. I also investigate the use of a training program and job creation subsidies. The final essay analyzes the optimal linear tax system when there is a population of individuals whose perceptions of savings are linked to their disposable income and their family background through family cultural transmission. Aside from the standard equity/efficiency trade-off, taxes account for the endogeneity of perceptions through two channels. First, taxing labor decreases income, which decreases the perception of savings through time. Second, taxation on savings corrects for the misperceptions of workers and thus savings and labor decisions. Numerical simulations confirm that behavioral issues push labor income taxes upward to finance saving subsidies. Government transfers to individuals are also decreased to finance those same subsidies.

Vibrational Feedback Training System for Use with SEMG Controlled Powered Prostheses

Loss of limb results in loss of function and a partial loss of freedom. A powered prosthetic device can partially assist an individual with everyday tasks and therefore return some level of independence. Powered upper limb prostheses are often controlled by the user generating surface electromyographic (SEMG) signals. The goal of this thesis is to develop a virtual environment in which a user can control a virtual hand to safely grasp representations of everyday objects using EMG signals from his/her forearm muscles, and experience visual and vibrotactile feedback relevant to the grasping force in the process. This can then be used to train potential wearers of real EMG controlled prostheses, with or without vibrotactile feedback. To test this system an experiment was designed and executed involving ten subjects, twelve objects, and three feedback conditions. The tested feedback conditions were visual, vibrotactile, and both visual and vibrotactile. In each experimental exercise the subject attempted to grasp a virtual object on the screen using the virtual hand controlled by EMG electrodes placed on his/her forearm. Two metrics were used: score, and time to task completion, where score measured grasp dexterity. It was hypothesized that with the introduction of vibrotactile feedback, dexterity, and therefore score, would improve and time to task completion would decrease. Results showed that time to task completion increased, and score did not improve with vibrotactile feedback. Details on the developed system, the experiment, and the results are presented in this thesis.