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Good Jobs, Bad Jobs and Redistribution Author info | Abstract | Publisher info | Download info | Related research | Statistics Lommerud, Kjell Erik
Sandvik, Bjorn
Staume, Odd Rune
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We analyse the question of optimal taxation in a dual economy, when the government 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. We find that whether the government should subsidise or tax investments is crucially dependent on union bargaining strength. If unions are weak, the optimal tax policy implies a combination of investment taxes and progressive income taxation. On the other hand, if unions are strong, we find that the best option for the government is to use investment subsidies in combination with either progressive or proportional taxation, the latter being the optimal policy if the government is not too concerned about inequality and if the cost of income taxation is sufficiently high.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 1022.
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Date of creation: 2003Date of revision:
Handle: RePEc:ces:ceswps:_1022Contact details of provider: Postal: Poschingerstrasse 5, 81679 Munich Phone: +49 (89) 9224-0 Fax: +49 (89) 985369 Web page: http://www.cesifo.de
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Keywords: rent sharing ; segmented labour markets ; optimal taxation ; redistribution ; Other versions of this item:
Article Paper Lommerud, Kjell Erik & Sandvik, B. & Straume, Odd Rune, 2003.
"Good Jobs, Bad Jobs and Redistribution ,"
CEPR Discussion Papers
4115, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Lommerud, K.E. & Sandvik, B. & Straume, O.R., 2001.
"Good Jobs, Bad Jobs and Redistribution ,"
Norway; Department of Economics, University of Bergen
1401, Department of Economics, University of Bergen.
Lommerud, Kjell Erik & Bj¯rn Sandvik & Odd Rune Straume, 2002.
"Good jobs, bad jobs and redistribution ,"
Royal Economic Society Annual Conference 2002
131, Royal Economic Society.
[Downloadable!] Find related papers by JEL classification: H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
This paper has been announced in the following NEP Reports :
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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.)
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