Analysis of Labor Tax Progression under Heterogeneous Domestic Labor Markets and Flexible Outsourcing
What are the impacts of labor tax reform on wage setting and employment to keep the relative tax burden per low-skilled and high-skilled workers constant in the case of heterogeneous domestic labor markets, i.e. imperfect competition in low-skilled labor and perfect competition in high-skilled labor in the presence of outsourcing? A higher degree of tax progression by raising the wage tax and the tax exemption for the low-skilled workers will decrease the wage rate and increase labor demand of low-skilled workers, whereas it will decrease (increase) employment of high-skilled workers in CES utility function when the elasticity of substitution between consumption and leisure is higher (lower) than one. A higher degree of wage tax progression for the high-skilled worker will have no effect on the high-skilled wage in the presence of CES utility function.
|Date of creation:||Nov 2010|
|Date of revision:|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rebecca Riley & Garry Young, 2007.
"Skill heterogeneity and equilibrium unemployment,"
Oxford Economic Papers,
Oxford University Press, vol. 59(4), pages 702-725, October.
- Erkki Koskela & Ronnie Schöb, 2000.
"Optimal Factor Income Taxation in the Presence of Unemployment,"
CESifo Working Paper Series
279, CESifo Group Munich.
- Koskela, Erkki & Schob, Ronnie, 2002. " Optimal Factor Income Taxation in the Presence of Unemployment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 387-404.
- Koskela, Erkki & Schöb, Ronnie, 2001. "Optimal Factor Income Taxation in the Presence of Unemployment," Discussion Papers 758, The Research Institute of the Finnish Economy.
- Hans-Werner Sinn, 2007.
"The Welfare State and the Forces of Globalization,"
NBER Working Papers
12946, National Bureau of Economic Research, Inc.
- Jan Rose Skaksen, 2004. "International outsourcing when labour markets are unionized," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 78-94, February.
- Alexander Hijzen & Holger Görg & Robert C. Hine, 2005.
"International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom,"
Royal Economic Society, vol. 115(506), pages 860-878, October.
- Hijzen, Alexander & Görg, Holger & Hine, Robert C., 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," IZA Discussion Papers 1249, Institute for the Study of Labor (IZA).
- Alexander Hijzen & Holger Görg & Robert C. Hine, 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Discussion Papers of DIW Berlin 437, DIW Berlin, German Institute for Economic Research.
- Geishecker, Ingo & Görg, Holger, 2007.
"Winners and losers: A Micro-level Analysis of International Outsourcing and Wages,"
CEPR Discussion Papers
6484, C.E.P.R. Discussion Papers.
- Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 243-270, February.
- Koskela, Erkki & Stenbacka, Rune, 2010. "Equilibrium unemployment with outsourcing and wage solidarity under labour market imperfections," European Economic Review, Elsevier, vol. 54(3), pages 376-392, April.
- Erkki Koskela & Ronnie Schöb, 2010.
"Outsourcing of Unionized Firms and the Impact of Labor Market Policy Reforms,"
Review of International Economics,
Wiley Blackwell, vol. 18(4), pages 682-695, 09.
- Erkki Koskela & Ronnie Schöb, 2008. "Outsourcing of Unionized Firms and the Impacts of Labour Market Policy Reforms," CESifo Working Paper Series 2360, CESifo Group Munich.
- Koskela, Erkki & Schöb, Ronnie, 2008. "Outsourcing of Unionized Firms and the Impact of Labor Market Policy Reforms," IZA Discussion Papers 3566, Institute for the Study of Labor (IZA).
- Hartmut Egger & Peter Egger, .
"International Outsourcing and the Productivity of Low-skilled Labour in the EU,"
WIFO Working Papers
- Hartmut Egger & Peter Egger, 2006. "International Outsourcing and the Productivity of Low-Skilled Labor in the EU," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 98-108, January.
- Gorg, Holger & Hanley, Aoife, 2005. "Labour demand effects of international outsourcing: Evidence from plant-level data," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 365-376.
- R. A. Musgrave & Tun Thin, 1948. "Income Tax Progression, 1929-48," Journal of Political Economy, University of Chicago Press, vol. 56, pages 498.
- Koskela, Erkki & Vilmunen, Jouko, 1996. "Tax progression is good for employment in popular models of trade union behaviour," Labour Economics, Elsevier, vol. 3(1), pages 65-80, August.
- Pierre Cahuc & Stéphane Carcillo & André Zylberberg, 2014.
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
- Eckel, Carsten & Egger, Hartmut, 2009.
"Wage bargaining and multinational firms,"
Journal of International Economics,
Elsevier, vol. 77(2), pages 206-214, April.
- Stefanova Boyka M, 2006. "The Political Economy of Outsourcing in the European Union and the East-European Enlargement," Business and Politics, De Gruyter, vol. 8(2), pages 1-45, August.
- Alexander Hijzen, 2007. "International Outsourcing, Technological Change, and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 188-205, 02.
- Aronsson, Thomas & Sjogren, Tomas, 2004. "Efficient taxation, wage bargaining and policy coordination," Journal of Public Economics, Elsevier, vol. 88(12), pages 2711-2725, December.
- Ethier, Wilfred J., 2005. "Globalization, globalisation: Trade, technology, and wages," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 237-258.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5313. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.