Labour tax progressivity and output volatility: evidence from OECD countries
AbstractThis paper investigates empirically the effect of personal income tax progressivity on output volatility in a sample of OECD countries over the period 1982-2009. Our measure of tax progressivity is based on the difference between the marginal and the average income tax rate for the average production worker. We find supportive empirical evidence for the hypothesis that higher personal income tax progressivity leads to lower output volatility. All other factors constant, countries with more progressive personal income tax systems seem to benefit from stronger automatic stabilisers. JEL Classification: E63, E32, H10
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Date of creation: Sep 2011
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Find related papers by JEL classification:
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- H10 - Public Economics - - Structure and Scope of Government - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-09-22 (Accounting & Auditing)
- NEP-ALL-2011-09-22 (All new papers)
- NEP-EEC-2011-09-22 (European Economics)
- NEP-PBE-2011-09-22 (Public Economics)
- NEP-PUB-2011-09-22 (Public Finance)
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