%0 Report %D 2023 %T Dynamic Job Market Signaling and Optimal Taxation %A Sztutman, Andre %K labor markets %K optimal taxes %K productivity %X How are optimal taxes affected by reputation building and imperfect information in labor markets? In this paper, I build a model of labor markets with incomplete and asymmetric information where job histories play a crucial role in transmitting information about workers’ productivity, which allows us to better understand the efficiency and distributive consequences of imperfect monitoring and screening in labor markets, and the tradeoffs the government faces when setting taxes. Optimal taxes are described by generalized versions of standard redistributive and corrective taxation formulas, which depend crucially on labor wedges: the marginal contribution to output relative to the increases in lifetime earnings that result from supplying one extra unit of labor at each period. Combining estimates from the literature and new estimates using data from the Health and Retirement Study, I find that the corrective component of taxes is likely to be large, especially at the top of the income distribution. %I Massachusetts Institute of Technology %C Cambridge, MA %G eng %U https://andresztutman.s3.amazonaws.com/jmp_sztutman.pdf