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Tax Coordination and Unemployment

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Author Info
Clemens Fuest
Bernd Huber

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Abstract

This paper analyses the implications of unemployment for fiscal competition and tax coordination among small open economies. Unemployment is modeled as resulting from wage bargaining. The analysis focuses on the effect of labour and capital tax coordination on welfare. We show that, while coordinated capital and labour tax increases unambiguously raise welfare if labour markets are competitive, different results emerge if labour markets are unionised. It turns out that coordinated capital and labour tax increases may reduce welfare. Copyright Kluwer Academic Publishers 1999

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File URL: http://hdl.handle.net/10.1023/A:1008666919052
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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 6 (1999)
Issue (Month): 1 (February)
Pages: 7-26
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Handle: RePEc:kap:itaxpf:v:6:y:1999:i:1:p:7-26

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Web page: http://www.springerlink.com/link.asp?id=102915

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Related research
Keywords: tax competition; tax coordination; unemployment; wage bargaining; capital mobility;

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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. 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:
  2. Hersoug, Tor, 1985. " Workers versus Government-Who Adjusts to Whom?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 87(2), pages 270-92.
  3. 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)
  4. Palokangas, Tapio, 1987. "Optimal Taxation and Employment Policy with a Centralized Wage Settin g," Oxford Economic Papers, Oxford University Press, vol. 39(4), pages 799-812, December. [Downloadable!] (restricted)
  5. Jeremy Edwards & Michael Keen, 1994. "Tax Competition and Leviathan," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich.
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  6. Hersoug, Tor, 1984. "Union Wage Responses to Tax Changes," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 37-51, March. [Downloadable!] (restricted)
  7. John Creedy & Ian M McDonald, 1989. "Trade Unions, wages and taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 10(3), pages 50-59, August.
  8. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March. [Downloadable!] (restricted)
  9. Bernd Huber, 1997. "Optimal Capital Income Taxes and Capital Controls in Small Open Economies," International Tax and Public Finance, Springer, vol. 4(1), pages 7-24, January. [Downloadable!] (restricted)
  10. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April. [Downloadable!] (restricted)
  11. 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)
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  12. Gabszewicz, J. J. & van Ypersele, T., 1996. "Social protection and political competition," Journal of Public Economics, Elsevier, vol. 61(2), pages 193-208, August. [Downloadable!] (restricted)
  13. 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)
  14. Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October. [Downloadable!] (restricted)
  15. Dr. Peter Kenning & Hilke Plassmann, 2004. "NeuroEconomics," Experimental 0412005, EconWPA. [Downloadable!]
  16. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December. [Downloadable!] (restricted)
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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. Canegrati, Emanuele, 2006. "The Single-Mindedness Theory: Micro-foundation and Applications to Social Security Systems," MPRA Paper 1223, University Library of Munich, Germany, revised Jun 2007. [Downloadable!]
  2. Canegrati, Emanuele, 2007. "The Single-Mindedness of Labor Unions: Theory and Empirical Evidence," MPRA Paper 1398, University Library of Munich, Germany. [Downloadable!]
  3. John P. Hutton & Anna Ruocco, . "Can Tax Progression Raise Employment? A Study of Four European Countries," Discussion Papers 99/21, Department of Economics, University of York. [Downloadable!]
  4. Boeters, Stefan, 2001. "Green tax reform and employment : the interaction of profit and factor taxes," ZEW Discussion Papers 01-45, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  5. Cremer, Helmuth & Pestieau, Pierre, 2002. "Factor Mobility and Redistribution: A Survey," IDEI Working Papers 154, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003. [Downloadable!]
  6. Haufler, Andreas & Mittermaier, Ferdinand, 2008. "Unionisation triggers tax incentives to attract foreign direct investment," Discussion Papers in Economics 3752, University of Munich, Department of Economics. [Downloadable!]
    Other versions:
  7. Marcel Gerard, 2002. "Tax Competition, the Distribution of MNE's Ownership and the Wage Formation Process," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Erkki Koskela & Ronnie Schöb, 2001. "Optimal Factor Income Taxation in the Presence of Unemployment," Discussion Papers 758, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  9. George Zodrow, 2003. "Tax Competition and Tax Coordination in the European Union," Asia-Pacific Financial Markets, Springer, vol. 10(6), pages 651-671, November. [Downloadable!] (restricted)
    Other versions:
  10. canegrati, emanuele, 2007. "The single-mindedness of labor unions when transfers are not Lump-Sum," MPRA Paper 2320, University Library of Munich, Germany. [Downloadable!]
  11. Kjetil Bjorvatn & Guttorm Schjelderup, 2000. "Tax Competition and International Public Goods," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  12. Nelly Exbrayat, 2008. "The Impact of Trade Integration and Agglomeration Economies on Tax Interactions : Evidence from OECD Countries," Post-Print hal-00270067_v1, HAL. [Downloadable!]
  13. Kind, Hans Jarle & Midelfart Knarvik, Karen Helene & Schjelderup, Guttorm, 2000. "Competing for Capital in a "Lumpy" World," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  14. Ulrich Hange, 2003. "Education Policy and Mobility: Some Basic Results," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  15. Boeters, Stefan, 2002. "Tax Progressivity and the Trade Union?s Fallback-Option," ZEW Discussion Papers 02-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  16. canegrati, emanuele, 2006. "The Single Mindedness Theory of Labor Unions," MPRA Paper 1224, University Library of Munich, Germany. [Downloadable!]
  17. Canegrati, Emanuele, 2007. "On redistribution effects of public debt amongst single-minded generations," MPRA Paper 2254, University Library of Munich, Germany. [Downloadable!]
  18. Aronsson, Thomas & Wehke, Sven, 2006. "Public Goods, Unemployment and Policy Coordination," UmeÃ¥ Economic Studies 700, Umeå University, Department of Economics. [Downloadable!]
    Other versions:
  19. Thomas Eichner & Marco Runkel, 2006. "Corporate Income Taxation of Multinationals and Unemployment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  20. Robin Boadway & Katherine Cuff & Nicolas Marceau, 2004. "Agglomeration Effects and the Competition for Firms," Asia-Pacific Financial Markets, Springer, vol. 11(5), pages 623-645, September. [Downloadable!] (restricted)
    Other versions:
  21. 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:
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