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Can Labor Market Imperfections Cause Overprovision of Public Inputs?

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  • Diego Martinez

    ()
    (Department of Economics, Universidad Pablo de Olavide)

  • Tomas Sjögren

    ()
    (Department of Economics, Umeå University)

Abstract

In a model where trade unions dominate the labor market, a relationship is derived between the rate of unemployment and the provision of a public input in the production. This relationship implies that for conventional rates of unemployment, the public input will be overprovided compared to the first-best level.

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File URL: http://www.upo.es/serv/bib/wps/econ0913.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 09.13.

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Length: 8 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:pab:wpaper:09.13

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Keywords: Public Inputs; Trade Unions.;

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References

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  1. Aronsson, Thomas & Wehke, Sven, 2006. "Public Goods, Unemployment and Policy Coordination," UmeÃ¥ Economic Studies 700, Umeå University, Department of Economics.
  2. Wilson, John Douglas, 1991. "Optimal Public Good Provision with Limited Lump-Sum Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 153-66, March.
  3. Ming Chang, 2000. "Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities," International Tax and Public Finance, Springer, vol. 7(1), pages 83-91, February.
  4. Thomas Aronsson & Erkki Koskela, 2008. "Optimal Redistributive Taxation and Provision of Public Input Goods in an Economy with Outsourcing and Unemployment," CESifo Working Paper Series 2481, CESifo Group Munich.
  5. Bovenberg, A.L. & Ploeg, F. van der, 1996. "Optimal taxation, public goods and environmental policy with involuntary unemployment," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73563, Tilburg University.
  6. Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008.
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Cited by:
  1. Diego Martinez & Tomas Sjögren, 2012. "Vertical externalities with lump-sum taxes: how much difference does unemployment make?," Working Papers 2012/25, Institut d'Economia de Barcelona (IEB).

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