Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/28046
Authors: 
Corneo, Giacomo
Year of Publication: 
2006
Series/Report no.: 
Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2006/21
Abstract: 
European economies are characterized by unionized labor markets and a pronounced governmental redistribution of income. This paper studies a model where those two features are combined with the possibility for individuals to make charitable contributions to the poor. The model exhibits equilibrium unemployment that increases with the degree of altruism. It is shown that a more progressive income tax can both reduce the unemployment rate and improve the public budget. These results are driven by charity increasing wage pressure and the altruistic rich failing to internalize the effect of their donations on the wage setting behavior of the unions.
Subjects: 
Equilibrium Unemployment
Income Tax
Charity
Trade Unions
JEL: 
J50
H24
ISBN: 
3938369469
Document Type: 
Working Paper

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