This paper concerns optimal factor income taxation and provision of a public good in a small open economy, which is characterized by union wage setting. The analysis is based on a general equilibrium model, where the hours of work are endogenous, and the tax instruments are linear taxes on labor income and capital income. The purpose of the paper is to characterize the conditions for optimal taxation and provision of a public good under excess supply of labor, and then compare the results with those arising when the labor market is competitive.
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Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number
560.
Length: 31 pages Date of creation: 30 May 2001 Date of revision: Handle: RePEc:hhs:umnees:0560
Contact details of provider: Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden Phone: 090 - 786 61 42 Fax: 090 - 77 23 02 Email: Web page: http://www.econ.umu.se/ More information through EDIRC
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