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Monopoly union, unemployment benefits and labour taxes: The unemployment problem revisited

Author

Listed:
  • Luca Gori

    () (University of Pisa)

  • Luciano Fanti

    () (University of Pisa)

Abstract

Unemployment is undoubtedly one of the most important concerns in developed countries, especially in Europe. Most of the related economic literature has discussed the possible influence of unemployment benefits on unemployment and welfare, assuming a lump-sum type benefit system, while the more realistic earnings-related (replacement rate) regime has been scarcely considered. Applying a fairly standard monopoly union model, we show that when unemployment benefit is related to the existing wage, the rate of unemployment can be reduced by increasing both the replacement rate and the labour tax.

Suggested Citation

  • Luca Gori & Luciano Fanti, 2009. "Monopoly union, unemployment benefits and labour taxes: The unemployment problem revisited," Economics Bulletin, AccessEcon, vol. 29(1), pages 482-490.
  • Handle: RePEc:ebl:ecbull:eb-08j60006
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I1-P50.pdf
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
    2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    3. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 47-104, April.
    4. Burkhard Heer, 2006. "Should Unemployment Benefits Be Related to Previous Earnings?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(4), pages 530-550, December.
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    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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