The name is absent

Proof of Proposition 6: Since we know from (A.21) that ∆ < 0, it follows directly
from (A.22) that condition (4.8) in Proposition 6 is necessary and sufficient to
ensure that ^dW - d^w > 0. ¥

Proof of Proposition 7: Inserting (A.18) and (A.19) into (A.31), one finds the
following welfare effect of a further coordinated increase in the capital tax rate
at the point where the recruitment constraint just ceases to bind (so that we still
have u_g = u_p and u⁰_g = u⁰_p = u⁰ initially):

—---"^ʌ) f^dSW^) = Yσc (α + δ)        . — (1 — α)

yu⁰ε (1 — α) ) y dτ )               |_a + αδ

α + δ α² + δ

^{- δ} + ^α (2 — ^α) + ( j ( —∩----г j             (A.34)

1+δ α (1 — α)

Since ∆< 0 according to (A.21), it follows directly from (A.34) that the con-
dition (4.9) stated in Proposition 7 is necessary and sufficient to guarantee that
dSW∕dτ > 0. ¥

39

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