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Union strategy and optimal income taxation

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  • Kessing, Sebastian G.
  • Konrad, Kai A.

Abstract

Restrictions on work hours are more important in countries with a large welfare state. We show that this empirical observation is consistent with the strategic effects of such restrictions in a welfare state in the context of optimal direct taxation in the tradition of Mirrlees (1971). Our results also apply to nonwelfarist states which have income redistribution, but not in purely extortionary states. -- Arbeitszeitbeschränkungen sind ein typisches Merkmal europäischer Wohlfahrtsstaaten. Wir zeigen, dass diese empirische Beobachtung mit den strategischen Wirkungen derartiger Restriktionen im Rahmen der Optimalsteuertheorie in der Tradition von Mirrlees (1971) übereinstimmt. Unsere Ergebnisse sind robust, solange die Regierung zumindest teilweise ein Umverteilungsziel verfolgt.

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2005-04.

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Date of creation: 2005
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Handle: RePEc:zbw:wzbmpg:spii200504

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Keywords: Optimal income taxation; labor unions; work hours;

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  1. Boadway, Robin & Marceau, Nicolas & Marchand, Maurice, 1996. "Investment in Education and the Time Inconsistency of Redistributive Tax Policy," Economica, London School of Economics and Political Science, vol. 63(250), pages 171-89, May.
  2. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  3. Joseph E. Stiglitz, 1982. "Self-Selection and Pareto Efficient Taxation," NBER Working Papers 0632, National Bureau of Economic Research, Inc.
  4. Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," Working Papers 650, Queen's University, Department of Economics.
  5. Sinn, Hans-Werner, 1995. " A Theory of the Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 495-526, December.
  6. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  7. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  8. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, vol. 88(1), pages 83-95, March.
  9. Bourguignon, F. & Spadaro, A., 2000. "Social Preferences Revealed through Effective Marginal Tax Rates," DELTA Working Papers 2000-29, DELTA (Ecole normale supérieure).
  10. Saez, Emmanuel, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 205-29, January.
  11. Shulamit Kahn & Kevin Lang, 1987. "Constraints on the Choice of Work Hours: Agency vs. Specific-Capital," NBER Working Papers 2238, National Bureau of Economic Research, Inc.
  12. Agell, Jonas & Lommerud, Kjell Erik, 1992. "Union Egalitarianism as Income Insurance," Economica, London School of Economics and Political Science, vol. 59(235), pages 295-310, August.
  13. Shulamit Kahn & Kevin Lang, 1992. "Constraints on the Choice of Work Hours: Agency Versus Specific-Capital," Journal of Human Resources, University of Wisconsin Press, vol. 27(4), pages 661-678.
  14. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
  15. Emmanuel Saez, 2000. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," NBER Working Papers 7708, National Bureau of Economic Research, Inc.
  16. Dillen, Mats & Lundholm, Michael, 1996. "Dynamic income taxation, redistribution, and the ratchet effect," Journal of Public Economics, Elsevier, vol. 59(1), pages 69-93, January.
  17. Homburg, Stefan, 2002. "Optimal Marginal Tax Rates for Low Incomes: Positive, Negative, or Zero?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-255, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  18. Homburg, Stefan, 2002. "The Optimal Income Tax: Restatement and Extensions," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-252, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  19. Konrad, Kai A, 1994. "The Strategic Advantage of Being Poor: Private and Public Provision of Public Goods," Economica, London School of Economics and Political Science, vol. 61(241), pages 79-92, February.
  20. Stern, Nicholas, 1982. "Optimum taxation with errors in administration," Journal of Public Economics, Elsevier, vol. 17(2), pages 181-211, March.
  21. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
  22. John M. Evans & Douglas C. Lippoldt & Pascal Marianna, 2001. "Trends in Working Hours in OECD Countries," OECD Labour Market and Social Policy Occasional Papers 45, OECD Publishing.
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