Commodity Taxes, Wage Determination, and Profits
AbstractWe examine the effects of two different types of commodity taxation, specific and ad valorem, on wages and profits. We analyze two models of wage determination, one with efficiency wage setting and one with union-firm bargaining. In the former, a (locally) revenue-neutral shift from specific to ad valorem taxation leads to an increase in both employment and wages and a reduction in profitability. In the latter, the effect on wages and profits may be reversed: predominantly ad valorem taxation raises employment but lowers wages, and under certain circumstances, the net effect is an increase in profits. Copyright 2001 by Blackwell Publishing Inc.
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 3 (2001)
Issue (Month): 2 ()
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Other versions of this item:
- Sophia Delipalla & Peter Sanfey, 1998. "Commodity Taxes, Wage Determination and Profits," Studies in Economics 9816, Department of Economics, University of Kent.
- Sophia Delipalla & Peter Sanfey, 2000. "Commodity Taxes, Wage Determination and Profits," Studies in Economics 0016, Department of Economics, University of Kent.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
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