Tax Progressivity and the Trade Union's Fallback-Option
AbstractWhen we analyse the labour market consequences of labour tax reforms in a model of firm-union wage bargaining, minor changes in the formulation of the union`s fallback option can have drastic effects. This paper compares two variants of the model in which either workers have no reemployment opportunity or the probality of employment in another sector is determined by the overall unemployment rate. It is argued both on analytical and numerical grounds that the second alternative is the only plausible one. This conclusion is confirmed by an explicit integration of workers´inter-sectoral mobility into the model. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 02-15.
Date of creation: 2002
Date of revision:
labour taxation; tax progression; tax reform; trade unions; unemployment; labour mobility;
Find related papers by JEL classification:
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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