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Good Jobs, Bad Jobs and Redistribution

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Author Info
Kjell Erik Lommerud
Bjørn Sandvik
Odd Rune Straume

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Abstract

We analyse the question of optimal taxation in a dual economy, when the policy-maker is concerned about the distribution of labour income. Income inequality is caused by the presence of sunk capital investments, which creates a "good jobs" sector due to the capture of quasi-rents by trade unions. With strong unions and high planner preference for income equality, the optimal policy is a combination of investment subsidies and progressive income taxation. If unions are weaker, the policy-maker may instead choose to tax investment. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

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Article provided by Blackwell Publishing in its journal The Scandinavian Journal of Economics.

Volume (Year): 106 (2004)
Issue (Month): 4 (December)
Pages: 703-720
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Handle: RePEc:bla:scandj:v:106:y:2004:i:4:p:703-720

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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.:
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  5. Amiel, Yoram & Creedy, John & Hurn, Stan, 1999. " Measuring Attitudes towards Inequality," Scandinavian Journal of Economics, Blackwell Publishing, vol. 101(1), pages 83-96, March. [Downloadable!] (restricted)
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  11. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January. [Downloadable!] (restricted)
  12. Eckhard Janeba, 2003. "Does Trade Increase Inequality when Skills are Endogenous?," Review of International Economics, Blackwell Publishing, vol. 11(5), pages 885-898, November. [Downloadable!] (restricted)
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  15. Kolm, Ann-Sofie, 2000. " Labour Taxation in a Unionised Economy with Home Production," Scandinavian Journal of Economics, Blackwell Publishing, vol. 102(4), pages 689-705, December. [Downloadable!] (restricted)
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  16. Sorensen, Peter Birch, 1999. "Optimal tax progressivity in imperfect labour markets," Labour Economics, Elsevier, vol. 6(3), pages 435-452, September. [Downloadable!] (restricted)
  17. Jonathan Temple, 2002. "Wage Inequality in a Dual Economy," Bristol Economics Discussion Papers 02/531, Department of Economics, University of Bristol, UK. [Downloadable!]
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  23. Lockwood, Ben, 1990. "Tax Incidence, Market Power, and Bargaining Structure," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 187-209, January. [Downloadable!] (restricted)
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  25. Sandmo, Agnar, 1998. "Redistribution and the marginal cost of public funds," Journal of Public Economics, Elsevier, vol. 70(3), pages 365-382, December. [Downloadable!] (restricted)
  26. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April. [Downloadable!] (restricted)
  27. Lommerud, Kjell Erik & Vagstad, Steinar, 2000. "Mommy Tracks and Public Policy: On Self-Fulfilling Prophecies and Gender Gaps in Promotion," CEPR Discussion Papers 2378, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  28. Layard, Richard, 1982. "Is Incomes Policy the Answer to Unemployment?," Economica, London School of Economics and Political Science, vol. 49(195), pages 219-39, August. [Downloadable!] (restricted)
  29. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March. [Downloadable!] (restricted)
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  32. Brunello, Giorgio & Parisi, Maria Laura & Sonedda, Daniela, 2002. "Labor Taxes and Wages: Evidence from Italy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  33. Erkki Koskela & Ronnie Schoeb, 2002. "Optimal Capital Taxation in Economies with Unionised and Competitive Labour Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  34. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September. [Downloadable!] (restricted)
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.)

  1. Mireia Valverde & Gerard Ryan & María Gorjup, 2007. "An Examination of the Quality of Jobs in the Call Center Industry," International Advances in Economic Research, Springer, vol. 13(2), pages 146-156, May. [Downloadable!] (restricted)
  2. Merkl, Christian & Snower, Dennis J., 2008. "Escaping the Unemployment Trap: The Case of East Germany," IZA Discussion Papers 3681, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Jörg Lingens & Klaus Wälde, 2006. "Pareto-Improving Unemployment Policies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Christian Merkl & Dennis J. Snower, 2007. "Escaping the Unemployment Trap — The Case of East Germany," Kiel Working Papers 1309, Kiel Institute for the World Economy. [Downloadable!]
  5. Pascal Belan & Martine Carré & Stéphane Gregoir, 2007. "Subsidizing low-skilled jobs in a dual labor market," THEMA Working Papers 2007-17, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
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