Labour Taxation in a Unionised Economy with Home Production
AbstractThis paper investigates the impact of payroll taxes on unemployment and welfare in a model with household production and union firm wage bargaining. It turns out that unemployment, most likely, falls with a reduced payroll tax in the market sector producing household substitutes (service sector), although the taxation in the rest of the economy needs to be raised. From a welfare point of view, in the presence of lump-sum taxes, it is optimal to subsidise the service sector, and the subsidy should be greater the more market power the negotiating units in the service sector exert in the wage bargains. Moreover, welfare improves with a reduced service sector payroll tax that is financed with higher distortionary taxes in the rest of the economy, if the two sectors are equally labour intensive.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 1998:7.
Length: 31 pages
Date of creation: 16 Feb 1998
Date of revision:
Publication status: Published in Scandinavian Journal of Economics, 2000, pages 689-705.
Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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Home production; optimal taxation; unemployment;
Other versions of this item:
- Kolm, Ann-Sofie, 2000. " Labour Taxation in a Unionised Economy with Home Production," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 689-705, December.
- Kolm, A.-S., 1998. "Labour Taxation in a Unionised Economy with Home Production," Papers 1998-7, Uppsala - Working Paper Series.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-08-21 (All new papers)
- NEP-LTV-1998-08-21 (Unemployment, Inequality & Poverty)
- NEP-MIC-1998-08-21 (Microeconomics)
- NEP-PBE-1998-08-21 (Public Economics)
- NEP-PUB-1998-08-21 (Public Finance)
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