Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82031
Authors: 
Eggert, Wolfgang
Goerke, Laszlo
Year of Publication: 
2002
Series/Report no.: 
EPRU Working Paper Series 2002-05
Abstract: 
Fiscal policy is examined in a model of an open economy which is characterised by unemployment caused by efficiency wages. It is shown that the conventional conclusion, according to which mobile capital is untaxed in the presence of wage taxation, is not generally valid. A positive capital tax allows to indirectly tax profits, thereby mitigating unemployment through the reduction in the effective tax burden on labour. It is argued that these policy conclusions are qualitatively unaffected by the cause of unemployment. Moreover, the welfare loss from labour market imperfections increases when tax bases become internationally mobile, which suggests an increasing relevance of domestic labour market reforms.
Document Type: 
Working Paper

Files in This Item:
File
Size
206.94 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.