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Average Labor Taxes and Unemployment: Evidence from Italian Regions

  • Brunello, Giorgio
  • Lupi, Claudio

    ()

  • Ordine, Patrizia

By focusing on the Italian experience, we ask whether the relationship between labor taxes and unemployment varies across regions. In spite of similar national labor market institutions, we show that this relationship is significantly stronger in the highly industrialized North than in the less developed South, where unemployment is much higher. An important source of variation in the regional responsiveness of unemployment originates from the fact that regional gross wages in the North increase more than in the South in response to a hike in labor taxes.

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File URL: http://web.unimol.it/progetti/repec/mol/ecsdps/ESDP03011.pdf
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Paper provided by University of Molise, Dept. EGSeI in its series Economics & Statistics Discussion Papers with number esdp03011.

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Length: 30 pages
Date of creation: 19 Oct 2003
Date of revision:
Handle: RePEc:mol:ecsdps:esdp03011
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  1. Christopher A. Pissarides, 1997. "The Impact of Employment Tax Cuts on Unemployment and Wages: The Role of Unemployment Benefits and Tax Structure," CEP Discussion Papers dp0361, Centre for Economic Performance, LSE.
  2. Corneo Giacomo & Lucifora Claudio, 1993. "Wage formation under union threat effects : theory and empirical evidence," CEPREMAP Working Papers (Couverture Orange) 9318, CEPREMAP.
  3. Holmlund, B. & Kolm, A.S., 1995. "Progressive Taxation, Wage Setting and Unemployment - Theory and Swedish Evidence," Papers 15, Uppsala - Working Paper Series.
  4. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
  5. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
  6. Ordine, Patrizia, 1995. "Wage drift and minimum contractual wage: Theoretical interrelationship and empirical evidence for Italy," Labour Economics, Elsevier, vol. 2(4), pages 335-357, December.
  7. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
  8. Jean-Paul Fitoussi & David Jestaz & Edmund S. Phelps & Gylfi Zoega, 2000. "Roots of the Recent Recoveries: Labor Reforms or Private Sector Forces?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 237-311.
  9. repec:ner:tilbur:urn:nbn:nl:ui:12-84119 is not listed on IDEAS
  10. 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.
  11. Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2001. "Widening differences in Italian regional unemployment," Labour Economics, Elsevier, vol. 8(1), pages 103-129, January.
  12. Daveri, Francesco & Tabellini, Guido, 1997. "Unemployment, Growth and Taxation in Industrial Countries," CEPR Discussion Papers 1681, C.E.P.R. Discussion Papers.
  13. Giorgio Brunello & Daniela Sonedda, 2006. "Progressive Taxation and Wage Setting when Unions Strategically Interact," "Marco Fanno" Working Papers 0017, Dipartimento di Scienze Economiche "Marco Fanno".
  14. Nickell, S.J. & van Ours, J.C., 1999. "The Netherlands and the United Kingdom : A European Unemployment Miracle?," Discussion Paper 1999-119, Tilburg University, Center for Economic Research.
  15. Bruno, Michael, 1984. "Raw Materials, Profits, and the Productivity Slowdown," The Quarterly Journal of Economics, MIT Press, vol. 99(1), pages 1-29, February.
  16. van Ours, J.C. & Nickell, S.J., 2000. "The Netherlands and the United Kingdom : A European unemployment miracle?," Other publications TiSEM 8dc4101d-6e72-44dd-9ab0-4, Tilburg University, School of Economics and Management.
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