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Outsourcing and Optimal Nonlinear Taxation: A Note

Author

Listed:
  • Aronsson, Thomas

    (Department of Economics, Umeå University)

  • Koskela, Erkki

    (Department of Economics)

Abstract

This paper addresses outsourcing in the two-type optimal income tax model. If the government is able to control outsourcing via a direct tax instrument, outsourcing will not affect the marginal income tax structure. In the absence of a direct tax instrument, and under the plausible assumption that higher outsourcing increases the wage differential, the government will implement a lower marginal income tax rate for the low-ability type and a higher marginal income tax rate for the high-ability type than it would otherwise have done.

Suggested Citation

  • Aronsson, Thomas & Koskela, Erkki, 2008. "Outsourcing and Optimal Nonlinear Taxation: A Note," Umeå Economic Studies 737, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0737
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    Cited by:

    1. Aronsson, Thomas & Koskela, Erkki, 2011. "Redistributive income taxation, outsourcing and foreign direct investment," Economics Letters, Elsevier, vol. 110(2), pages 86-89, February.
    2. Thomas Aronsson & Erkki Koskela, 2010. "Redistributive Income Taxation under Outsourcing and Foreign Direct Investment," CESifo Working Paper Series 3051, CESifo.
    3. Marek Potkany & Renata Stasiak-Betlejewska & Robert Kovac & Milos Gejdos, 2016. "OUTSOURCING IN CONTIDIONS OF SMEs – THE POTENTIAL FOR COST SAVINGS," Polish Journal of Management Studies, Czestochowa Technical University, Department of Management, vol. 13(1), pages 145-156, June.
    4. Michal Cioch, 2024. "Forecasting the Outsourcing Use in Small and Medium-Sized Enterprises: A Multiple Regression Model," European Research Studies Journal, European Research Studies Journal, vol. 0(Special B), pages 456-472.
    5. Aronsson, Thomas & Koskela, Erkki, 2009. "Outsourcing, Public Input Provision and Policy Cooperation," Umeå Economic Studies 799, Umeå University, Department of Economics.
    6. Aronsson, Thomas & Koskela, Erkki, 2008. "Optimal Redistributive Taxation and Provision of Public Input Goods in an Economy with Outsourcing and Unemployment," Umeå Economic Studies 759, Umeå University, Department of Economics.
    7. Aronsson, Thomas & Koskela, Erkki, 2009. "Optimal Income Taxation, Outsourcing and Policy Cooperation in a Dynamic Economy," Umeå Economic Studies 784, Umeå University, Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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