IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-06j50002.html
   My bibliography  Save this article

Funding public health care: A flat-rate premium might be bad for employment

Author

Listed:
  • Michael T. Feil

    (Institute for Employment Research)

Abstract

If "tax progression is good for employment in popular models of trade union behaviour" (Koskela and Vilmunen, 1996), then a flat-rate premium, as proposed as a means of funding for public health care, is bad. This note shows that replacing existing (proportional) social security contributions by a lump-sum payment increases labour costs and thus reduces employment. This result holds - for empirically relevant parameters - even in a more general case than the one considered by Koskela and Vilmunen. Policy advisers should be aware that in imperfect competitive labour markets the prima facie attractiveness of a flat-rate premium is not for sure.

Suggested Citation

  • Michael T. Feil, 2006. "Funding public health care: A flat-rate premium might be bad for employment," Economics Bulletin, AccessEcon, vol. 10(3), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-06j50002
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2006/Volume10/EB-06J50002A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Koskela, Erkki & Vilmunen, Jouko, 1996. "Tax progression is good for employment in popular models of trade union behaviour," Labour Economics, Elsevier, vol. 3(1), pages 65-80, August.
    3. Bovenberg, A.L., 2003. "Tax Policy and Labor Market Performance," Discussion Paper 2003-90, Tilburg University, Center for Economic Research.
    4. Bovenberg, A.L., 2003. "Tax Policy and Labor Market Performance," Other publications TiSEM 68fd52eb-a6d6-4300-8636-c, Tilburg University, School of Economics and Management.
    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. Feil, Michael & Klinger, Sabine & Zika, Gerd, 2006. "Sozialabgaben und Beschäftigung : Simulationen mit drei makroökonomischen Modellen," IAB-Discussion Paper 200622, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    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. Holmlund, Bertil & Söderström, Martin, 2007. "Estimating Income Responses to Tax Changes: A Dynamic Panel Data Approach," IZA Discussion Papers 3088, Institute of Labor Economics (IZA).
    2. Holmlund Bertil & Söderström Martin, 2011. "Estimating Dynamic Income Responses to Tax Reform," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-38, November.
    3. Holmlund, Bertil & Söderström, Martin, 2008. "Estimating dynamic income responses to tax reforms: Swedish evidence," Working Paper Series 2008:28, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Frederick Van der Ploeg, 2004. "The Welfare State, Redistribution and the Economy, Reciprocal Altruism, Consumer Rivalry and Second Best," CESifo Working Paper Series 1234, CESifo.
    5. Palić Irena & Hodžić Sabina & Dumičić Ksenija, 2019. "Personal Income Taxation Determinants in Federation of Bosnia and Herzegovina," Business Systems Research, Sciendo, vol. 10(1), pages 153-163, April.
    6. Feil, Michael & Klinger, Sabine & Zika, Gerd, 2006. "Sozialabgaben und Beschäftigung : Simulationen mit drei makroökonomischen Modellen," IAB-Discussion Paper 200622, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Bertil Holmlund, 2002. "Labor Taxation in Search Equilibrium with Home Production," German Economic Review, Verein für Socialpolitik, vol. 3(4), pages 415-430, November.
    8. Michaelis, Jochen & Birk, Angela, 2006. "Employment- and growth effects of tax reforms," Economic Modelling, Elsevier, vol. 23(6), pages 909-925, December.
    9. Peichl, Andreas, 2008. "The benefits of linking CGE and Microsimulation Models - Evidence from a Flat Tax analysis," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 08-6, University of Cologne, FiFo Institute for Public Economics.
    10. Batyra, Anna & Sneessens, Henri R., 2010. "Selective reductions in labor taxation: Labor market adjustments and macroeconomic performance," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 531-543, July.
    11. Koskela, Erkki, 2010. "Outsourcing Cost and Tax Progression under Nash Wage Bargaining with Flexible Outsourcing," IZA Discussion Papers 5097, Institute of Labor Economics (IZA).
    12. repec:ebl:ecbull:v:10:y:2006:i:3:p:1-10 is not listed on IDEAS
    13. José Ramón García, 2004. "Desempleo Y Estructura Impositiva En El Mercado De Trabajo De La Ocde," Working Papers. Serie EC 2004-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    14. Peichl, Andreas, 2005. "Die Evaluation von Steuerreformen durch Simulationsmodelle," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 05-1, University of Cologne, FiFo Institute for Public Economics.
    15. Daniel Cardona & Fernando Sánchez-Losada, 2004. "The Unemployment Benefit System: a Redistributive or an Insurance Institution?," DEA Working Papers 8, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    16. Florian Baumann & Nikolai Stähler, 2006. "Financing Unemployment Benefits: Dismissal versus Employment Taxes," LABOUR, CEIS, vol. 20(3), pages 433-451, September.
    17. Jaakko Pehkonen, 1999. "Wage formation in Finland, 1960-1994," Finnish Economic Papers, Finnish Economic Association, vol. 12(2), pages 82-91, Autumn.
    18. Gerritsen, Aart, 2017. "Equity and efficiency in rationed labor markets," Journal of Public Economics, Elsevier, vol. 153(C), pages 56-68.
    19. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2016. "Unions, innovation and cross-country wage inequality," Journal of Economic Dynamics and Control, Elsevier, vol. 64(C), pages 104-118.
    20. Sergio Destefanis & Matteo Fragetta & Giuseppe Mastromatteo & Nazzareno Ruggiero, 2020. "The Beveridge curve in the OECD before and after the great recession," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(3), pages 411-436, September.
    21. Bart Van Ark & Jakob De Haan, 2000. "The Delta-Model Revisited: Recent trends in the structural performance of the Dutch economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(3), pages 307-321.

    More about this item

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    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:ebl:ecbull:eb-06j50002. 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: John P. Conley (email available below). General contact details of provider: .

    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.