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Wage setting and tax progressivity in dynamic general equilibrium

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  • Thomas Aronsson
  • Karl-Gustaf L–fgren
  • Tomas Sj–gren
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    Abstract

    This paper concerns the implications of progressive labor income taxation for wage determination in dynamic general equilibrium. The main purpose is to analyze the general equilibrium effects of increased tax progressivity in terms of the responses in the real wage rate, employment, the capital stock, output and consumption. Among the results, we find that increased tax progressivity increases the real wage rate and decreases employment under both union and competitive wage formation. Copyright 2002, Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Economic Papers.

    Volume (Year): 54 (2002)
    Issue (Month): 3 (July)
    Pages: 490-504

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    Handle: RePEc:oup:oxecpp:v:54:y:2002:i:3:p:490-504

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    Cited by:
    1. Lommerud, Kjell Erik & Sandvik, B. & Straume, Odd Rune, 2003. "Good Jobs, Bad Jobs and Redistribution," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4115, C.E.P.R. Discussion Papers.
    2. Alho, Kari O. E., 2006. "Labour Market Institutions and the Effectiveness of Tax and Benefit Policies in Enchancing Employment: A General Equilibrium Analysis," Discussion Papers, The Research Institute of the Finnish Economy 1008, The Research Institute of the Finnish Economy.
    3. Sonedda, Daniela, 2006. "Macroeconomics effects of progressive taxation in a unionized economy," Economic Modelling, Elsevier, Elsevier, vol. 23(1), pages 110-130, January.
    4. Alho, Kari, 2002. "The Equilibrium Rate of Unemployment and Policies to Lower It: The Case of Finland," Discussion Papers, The Research Institute of the Finnish Economy 839, The Research Institute of the Finnish Economy.

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