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Average Labor Taxes and Unemployment: Evidence from Italian Regions

Author

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  • Brunello, Giorgio
  • Lupi, Claudio
  • Ordine, Patrizia

Abstract

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.

Suggested Citation

  • Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2003. "Average Labor Taxes and Unemployment: Evidence from Italian Regions," Economics & Statistics Discussion Papers esdp03011, University of Molise, Department of Economics.
    • Handle: RePEc:mol:ecsdps:esdp03011
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    Cited by:

    1. Marek Gora & Artur Radziwill & Agnieszka Sowa & Mateusz Walewski, 2006. "Tax Wedge and Skills: Case of Poland in International Perspective," CASE Network Reports 0064, CASE-Center for Social and Economic Research.
    2. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memorandum 224.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Marc van der Steeg & Roel van Elk & Dinand Webbink, 2012. "Does intensive coaching reduce school dropout?," CPB Discussion Paper 224.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Kees Folmer, 2009. "Why do macro wage elasticities diverge? A meta analysis," CPB Discussion Paper 122, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Kees Folmer, 2009. "Why do macro wage elasticities diverge?," CPB Memorandum 224, CPB Netherlands Bureau for Economic Policy Analysis.

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    More about this item

    Keywords

    regional unemployment; labor taxes.;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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