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http://hdl.handle.net/10419/28612
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| Title: | | Optimal tax progressivity in unionised labour markets: what are the driving forces?  |
| Authors: | | Boeters, Stefan |
| Issue Date: | | 2009 |
| Series/Report no.: | | ZEW Discussion Papers 09-065 |
| Abstract: | | In labour markets with collective wage bargaining higher progressivity of the labour income tax creates a trade-off. On the one hand, wages are lowered and unemployment decreases, on the other hand, the individual labour supply decision is distorted at the hours-of-work margin. The optimal level of tax progressivity within this trade-off is determined using a numerical general equilibrium model with imperfect competition on the goods market, collective wage bargaining and a labour-supply module calibrated to empirically plausible elasticity values. The model is calibrated to macroeconomic and institutional parameters of both the OECD average and a number of individual OECD-countries. In most cases the optimal degree of tax progressivity is below the actual level. A decomposition approach shows that the optimal level is increased by high unemployment and by the general tax level. |
| Subjects: | | labour taxation tax progressivity optimal taxation collective wage bargaining unemployment |
| JEL: | | H21 J22 J51 J64 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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