IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v75y1999i2p156-166.html
   My bibliography  Save this article

The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model

Author

Listed:
  • JUIN‐JEN CHANG
  • CHUNG‐CHENG LIN
  • CHING‐CHONG LAI

Abstract

This paper examines the unemployment and wage effects of the tax shift from an income tax to a consumption tax in a shirking‐type efficiency wage model. It is found that the results of the ex‐ante individual income‐neutral and aggregate revenue‐neutral proposals in this paper's efficiency wage model confirm those in the monopoly trade union model analyzed by Sampson (1986), Creedy and McDonald (1990, 1992), and Pemberton (1992). The ex‐post tax‐shifting schemes are also discussed.

Suggested Citation

  • Juin‐Jen Chang & Chung‐Cheng Lin & Ching‐Chong Lai, 1999. "The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 156-166, June.
    • Handle: RePEc:bla:ecorec:v:75:y:1999:i:2:p:156-166
    DOI: 10.1111/j.1475-4932.1999.tb02444.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1999.tb02444.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1999.tb02444.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pisauro, Giuseppe, 1991. "The effect of taxes on labour in efficiency wage models," Journal of Public Economics, Elsevier, vol. 46(3), pages 329-345, December.
    2. George A. Akerlof & Janet L. Yellen, 1985. "A Near-Rational Model of the Business Cycle, with Wage and Price Inertia," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(Supplemen), pages 823-838.
    3. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
    4. Creedy, John & McDonald, Ian M, 1992. "Union Wage Responses to a Shift from Direct to Indirect Taxation," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 221-232, July.
    5. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    6. Pemberton, James, 1992. "Taxation and Wage Bargaining," The Economic Record, The Economic Society of Australia, vol. 68(203), pages 318-327, December.
    7. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290, National Bureau of Economic Research, Inc.
    8. Chatterji, Monojit, 1986. "Unions, Employment and the Inflation Tax," Economic Journal, Royal Economic Society, vol. 96(382), pages 342-351, June.
    9. Dreze, Jacques H. & Malinvaud, Edmond, 1994. "Growth and employment: The scope of a European initiative," European Economic Review, Elsevier, vol. 38(3-4), pages 489-504, April.
    10. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-538, June.
    11. R. Jackman & R. Layard, 1982. "An inflation tax," Fiscal Studies, Institute for Fiscal Studies, vol. 3(2), pages 47-59, July.
    12. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    13. Hersoug, Tor, 1984. "Union Wage Responses to Tax Changes," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 37-51, March.
    14. James Pemberton, 1992. "Taxation and Wage Bargaining," The Economic Record, The Economic Society of Australia, vol. 68(4), pages 318-327, December.
    15. Layard, P R G & Nickell, S J, 1980. "The Case for Subsidising Extra Jobs," Economic Journal, Royal Economic Society, vol. 90(357), pages 51-73, March.
    16. Sampson, Anthony A & Simmons, Robert, 1992. "The Union Response to the Poll Tax," Scottish Journal of Political Economy, Scottish Economic Society, vol. 39(4), pages 431-438, November.
    17. Hart, Robert A, 1989. "The Employment and Hours Effects of a Marginal Employment Subsidy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 36(4), pages 385-395, November.
    18. John Creedy & Ian M. Mcdonald, 1990. "A Tax Package to Reduce the Marginal Rate of Income Tax and the Wage Demands of Trade Unions," The Economic Record, The Economic Society of Australia, vol. 66(3), pages 195-202, September.
    19. Creedy, John & McDonald, Ian M, 1990. "A Tax Package to Reduce the Marginal Rate of Income Tax and the Wage Demands of Trade Unions," The Economic Record, The Economic Society of Australia, vol. 66(194), pages 195-202, September.
    20. Chatrerji, Monojit & Sparks, Roger, 1991. "Real wages, productivity, and the cycle: An efficiency wage model," Journal of Macroeconomics, Elsevier, vol. 13(3), pages 495-510.
    21. Sampson, Anthony A, 1986. "The Shift to Indirect Taxation in a Unionized Economy," Bulletin of Economic Research, Wiley Blackwell, vol. 38(1), pages 87-91, January.
    22. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laszlo Goerke, 2006. "Earnings‐related Severance Pay," LABOUR, CEIS, vol. 20(4), pages 651-672, December.
    2. Laszlo Goerke, 2002. "Redundancy Pay and Collective Dismissals," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(1), pages 68-90, February.
    3. Xu Zifei & Tang Xiaoxu & Cui Yan, 2009. "The Effect of Tax Policy Choices on the Labor Market on the Perspective of Global Governance," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(2), pages 316-327, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chung‐Cheng Lin & Ching‐Chong Lai, 1998. "Efficiency Wages, Partial Wage Rigidity, and Money Nonneutrality," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 331-340, October.
    2. Lin, Chung-cheng & Chang, Juin-jen & Lai, Ching-chong, 2002. "Profit sharing as a worker discipline device," Economic Modelling, Elsevier, vol. 19(5), pages 815-828, November.
    3. Hélène Zajdela, 1990. "Le dualisme du marché du travail : enjeux et fondements théoriques," Économie et Prévision, Programme National Persée, vol. 92(1), pages 31-42.
    4. John Freebairn, 1995. "Reconsidering the Marginal Welfare Cost of Taxation," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 121-131, June.
    5. Sonia R Bhalotra, 1998. "Investigating Rationality in Wage-Setting," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 10, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    6. Sophia Delipalla & Peter Sanfey, 2001. "Commodity Taxes, Wage Determination, and Profits," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(2), pages 203-217, April.
    7. Katarzyna Budnik, 2012. "Do those who stay work less? On the impact of emigration on the measured TFP in Poland," NBP Working Papers 113, Narodowy Bank Polski.
    8. Ahmad Jafari Samimi, 2011. "Efficiency Wage Hypothesis: The Case Study of Iran's Manufacturing Industries," Journal of Social and Development Sciences, AMH International, vol. 1(5), pages 157-164.
    9. Xu Zifei & Tang Xiaoxu & Cui Yan, 2009. "The Effect of Tax Policy Choices on the Labor Market on the Perspective of Global Governance," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(2), pages 316-327, June.
    10. Sonia Bhalotra, 2006. "Near rationality in wage setting," Applied Economics, Taylor & Francis Journals, vol. 38(21), pages 2513-2521.
    11. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 2000. "Working hard for the money? Efficiency wages and worker effort," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 351-385, August.
    12. Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
    13. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    14. Constança Esteves-Sorenson, 2018. "Gift Exchange in the Workplace: Addressing the Conflicting Evidence with a Careful Test," Management Science, INFORMS, vol. 64(9), pages 4365-4388, September.
    15. Kory Kroft & Kavan Kucko & Etienne Lehmann & Johannes Schmieder, 2020. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 12(1), pages 254-292, February.
    16. Erica L. Groshen & Mark E. Schweitzer, 1996. "Macro- and microeconomic consequences of wage rigidity," Working Papers (Old Series) 9607, Federal Reserve Bank of Cleveland.
    17. Canegallo, Claudia, 1999. "Funzionamento del mercato del lavoro in presenza di informazione asimmetrica. Una rassegna della letteratura," POLIS Working Papers 8, Institute of Public Policy and Public Choice - POLIS.
    18. Ching-Chong Lai & Chih-Yu Yang & Ming-Ruey Kao, 2002. "Abatement Expenditure Acts as an Environmental Investment: An Efficiency Wage Viewpoint," The American Economist, Sage Publications, vol. 46(1), pages 66-70, March.
    19. Laszlo Goerke, 2006. "Earnings‐related Severance Pay," LABOUR, CEIS, vol. 20(4), pages 651-672, December.
    20. Frank Scharr, 2005. "Tarifbindung, Rententeilung und Konzessionsverträge als Einflussgrößen der Lohnhöhe in Unternehmen : eine Untersuchung mit Mikrodaten für thüringische Firmen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 39, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:75:y:1999:i:2:p:156-166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.