Environmental Policy, Efficient Taxation and Unemployment
AbstractIn this paper, I consider environmental policy as part of a mixed tax problem with a general income tax and linear commodity taxes. I assume that the wage rate is determined by bargaining between unions and firms. The results show that the change in the number of employed persons, following a change in the use of a tax instrument, affects the optimal tax structure via two channels; (i) it makes the tax revenues available for public expenditures more or less costly to collect, and (ii) it affects the aggregate demand for the good that causes the environmental damage. This means that the use of taxation to counteract the labor market imperfection is not easily separated from the environmental aspects of tax policy. As a consequence, the so called 'additivity' property characterizing the commodity tax structure in previous studies does not apply.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 607.
Length: 32 pages
Date of creation: 03 Apr 2003
Date of revision:
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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
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Web page: http://www.econ.umu.se/
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Optimal taxation; external effects; unemployment;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-09 (All new papers)
- NEP-ENE-2003-04-09 (Energy Economics)
- NEP-PUB-2003-04-09 (Public Finance)
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