This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Optimal Factor Income Taxation in the Presence of Unemployment

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
 Koskela, Erkki
Schob, Ronnie

Additional information is available for the following registered author(s):

Abstract

According to conventional wisdom internationally mobile capital should not be taxed or should be taxed at a lower rate than labour. An important underlying assumption behind this view is that there are no market imperfections, in particular that labour markets clear competitively. At least for Europe, which has been suffering from high unemployment for a long time, this assumption does not seem appropriate. This paper studies the optimal factor taxation in the presence of unemployment which results from the union-firm wage bargaining both with optimal and restricted profit taxation when capital is internationally mobile and labour immobile. In setting tax rates the government is assumed to behave as a Stackelberg leader towards the private sector playing a Nash game. The main conclusion is that in the presence of unemployment, the conventional wisdom turns on its head; capital should generally be taxed at a higher rate than labour. Copyright 2002 by Blackwell Publishing Inc.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=jpet&volume=4&issue=3&year=2002&part=null
File Format: text/html
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 4 (2002)
Issue (Month): 3 ()
Pages: 387-404
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:bla:jpbect:v:4:y:2002:i:3:p:387-404

Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=1097-3923

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kari Alho & Colin Hazley & Hannu Hernesniemi & Mika Widgrén, 2001. "EU:n itälaajenemisen vaikutukset Suomen tuotantorakenteeseen," Discussion Papers 752, The Research Institute of the Finnish Economy. [Downloadable!]
  2. Erkki Koskela & Ronnie Schöb & Hans-Werner Sinn, 1998. "Pollution, Factor Taxation and Unemployment," International Tax and Public Finance, Springer, vol. 5(3), pages 379-396, July. [Downloadable!] (restricted)
    Other versions:
  3. Erkki Koskela & Matti Virén, 2000. "Is There a Laffer Curve Between Aggregate Output and Public Sector Employment," Discussion Papers 737, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Hannu Piekkola, 2000. "Unobserved Human Capital and Firm-Size Premium," Discussion Papers 739, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer. [Downloadable!] (restricted)
  6. Matti Virén, 2000. "Financing the Welfare State in the Global Economy," Discussion Papers 732, The Research Institute of the Finnish Economy. [Downloadable!]
  7. Laura Paija, 2000. "ICT Cluster - The Engine of Knowledge-driven Growth in Finland," Discussion Papers 733, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Pekka Ilmakunnas & Mika Maliranta, 2001. "The Turnover of Jobs and Workers in a Deep Recession: Evidence from the Finnish Business Sector," Discussion Papers 747, The Research Institute of the Finnish Economy. [Downloadable!]
  9. Topi Miettinen, 2002. "Poikkeavatko valtionyhtiöt yksityisistä? - Valtionyhtiöiden tavoitteiden kehitys ja vertailu yksityisomistettuihin yrityksiin," Discussion Papers 730, The Research Institute of the Finnish Economy. [Downloadable!]
  10. Assaf Razin & Efraim Sadka, 1991. "International Tax Competition and Gains from Tax Harmonization," NBER Working Papers 3152, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier. [Downloadable!] (restricted)
    Other versions:
  12. Huizinga, Harry & Nielsen, Soren Bo, 1997. "Capital income and profit taxation with foreign ownership of firms," Journal of International Economics, Elsevier, vol. 42(1-2), pages 149-165, February. [Downloadable!] (restricted)
    Other versions:
  13. Mintz, Jack & Tulkens, Henry, 1996. "Optimality properties of alternative systems of taxation of foreign capital income," Journal of Public Economics, Elsevier, vol. 60(3), pages 373-399, June. [Downloadable!] (restricted)
    Other versions:
  14. Ari Hyytinen, 2001. "Information Production, Banking Competition and the Market Structure of the Banking Industry," Discussion Papers 749, The Research Institute of the Finnish Economy. [Downloadable!]
  15. Guesnerie Roger & Laffont Jean-jacques, 1978. "Taxing price makers," CEPREMAP Working Papers (Couverture Orange) 7806, CEPREMAP.
    Other versions:
  16. Holm, Pasi & Honkapohja, Seppo & Koskela, Erkki, 1994. "A monopoly-union model of wage determination with capital and taxes: An empirical application to the Finnish manufacturing," European Economic Review, Elsevier, vol. 38(2), pages 285-303, February. [Downloadable!] (restricted)
  17. Erkki Koskela & Ronnie Schoeb, 1998. "Why Governments should Tax Mobile Capital in the Presence of Unemployment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  18. Matti Virén & Erkki Koskela, 2000. "Is there a Laffer curve between aggregate output and public sector employment?," Empirical Economics, Springer, vol. 25(4), pages 605-621. [Downloadable!] (restricted)
  19. Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 333-350, November. [Downloadable!] (restricted)
  20. Bovenberg, A. Lans & van der Ploeg, Frederick, 1996. "Optimal taxation, public goods and environmental policy with involuntary unemployment," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 59-83, October. [Downloadable!] (restricted)
  21. Mika Widgrén & Stefan Napel, 2001. "Inferior players in simple games," International Journal of Game Theory, Springer, vol. 30(2), pages 209-220. [Downloadable!] (restricted)
  22. Keen, Michael & Piekkola, Hannu, 1997. " Simple Rules for the Optimal Taxation of International Capital Income," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(3), pages 447-61, September. [Downloadable!] (restricted)
    Other versions:
  23. Eggert, Wolfgang & Haufler, Andreas, 1999. "Capital taxation and production efficiency in an open economy," Economics Letters, Elsevier, vol. 62(1), pages 85-90, January. [Downloadable!] (restricted)
  24. Mika Maliranta, 2001. "Productivity Growth and Micro-level Restructuring. Finnish experiences during the turbulent decades," Discussion Papers 757, The Research Institute of the Finnish Economy. [Downloadable!]
  25. Bruce, Neil, 1992. "A Note on the Taxation of International Capital Income Flows," The Economic Record, The Economic Society of Australia, vol. 68(202), pages 217-21, September.
    Other versions:
  26. Hannu Hernesniemi & Pekka Lindroos, 2000. "Socio-economic Impact of European Single Market on Lithuanian Companies," Discussion Papers 746, The Research Institute of the Finnish Economy. [Downloadable!]
  27. Koskela, Erkki & Schoeb, Ronnie, 2000. "Optimal Factor Income Taxation in the Presence of Unemployment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  28. Clemens Fuest & Bernd Huber, 1999. "Tax Coordination and Unemployment," International Tax and Public Finance, Springer, vol. 6(1), pages 7-26, February. [Downloadable!] (restricted)
    Other versions:
  29. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March. [Downloadable!] (restricted)
  30. Koskela, Erkki & Schöb, Ronnie & Sinn, Hans-Werner, 1999. "Green Tax Reform and Competitiveness," CEPR Discussion Papers 2089, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  31. Stefan Boeters & Kerstin Schneider, 1999. "Government versus Union. The Structure of Optimal Taxation in a Unionized Labor Market," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(2), pages 174-, June.
  32. Pasi Huovinen & Hannu Piekkola, 2001. "Unemployment and Early Retirements of the Aged Workers in Finland," Discussion Papers 750, The Research Institute of the Finnish Economy. [Downloadable!]
  33. Hersoug, Tor, 1984. "Union Wage Responses to Tax Changes," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 37-51, March. [Downloadable!] (restricted)
  34. Erkki Koskela & Markku Ollikainen, 2000. "Optimal Forest Conservation: Competitiveness Versus Green Image Effects," Discussion Papers 728, The Research Institute of the Finnish Economy. [Downloadable!]
  35. Esa Viitamo, 2000. "Metsäklusterin palvelut - kilpailukykyanalyysi," Discussion Papers 727, The Research Institute of the Finnish Economy. [Downloadable!]
  36. Sinimaaria Ranki, 2000. "Does the Euro Exchange Rate Matter ?," Discussion Papers 729, The Research Institute of the Finnish Economy. [Downloadable!]
  37. Wolfram Richter & Kerstin Schneider, 2001. "Taxing Mobile Capital with Labor Market Imperfections," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  38. Erkki Koskela & Markku Ollikainen & Mikk0 Puhakka, 2001. "Renewable Resources in an Overlapping Generations Economy without Capital," Discussion Papers 751, The Research Institute of the Finnish Economy. [Downloadable!]
  39. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April. [Downloadable!] (restricted)
  40. Jaakko Kiander & Matti Virén, 2000. "Measuring Labour Market Flexibility in the OECD Countries," Discussion Papers 745, The Research Institute of the Finnish Economy. [Downloadable!]
  41. Olavi Rantala, 2001. "Toimialojen ja avainklustereiden tuotannon ja työllisyyden pitkän ajan kehitys," Discussion Papers 754, The Research Institute of the Finnish Economy. [Downloadable!]
  42. Stefan Homburg, 1999. "Competition and Co-ordination in International Capital Income Taxation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(1), pages 1-, March.
  43. Hyytinen, Ari, 2003. "Loan market equilibrium with difference of opinion and imperfect competition," Economics Letters, Elsevier, vol. 78(1), pages 125-129, January. [Downloadable!] (restricted)
  44. Summers, Lawrence H & Gruber, Jonathan & Vergara, Rodrigo, 1993. "Taxation and the Structure of Labor Markets: The Case of Corporatism," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 385-411, May. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.
Statistics
Access and download statistics

Did you know? Authors can create their own profile with links to their works on the RePEc Author Service.

This page was last updated on 2009-11-22.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.