Can Labor Market Imperfections Cause Overprovision of Public Inputs?
In a model where trade unions dominate the labor market, a relationship is derived between the rate of unemployment and the provision of a public input in the production. This relationship implies that for conventional rates of unemployment, the public input will be overprovided compared to the first-best level.
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- Aronsson, Thomas & Wehke, Sven, 2008.
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"Optimal taxation, public goods and environmental policy with involuntary unemployment,"
Journal of Public Economics,
Elsevier, vol. 62(1-2), pages 59-83, October.
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- Thomas Aronsson & Erkki Koskela, 2008. "Optimal Redistributive Taxation and Provision of Public Input Goods in an Economy with Outsourcing and Unemployment," CESifo Working Paper Series 2481, CESifo Group Munich.
- Diego Martinez Lopez & A. Jesus Sanchez Fuentes, 2006. "On the optimal level of public inputs," Working Papers 06.34, Universidad Pablo de Olavide, Department of Economics, revised Mar 2008.
- Ming Chang, 2000. "Rules and Levels in the Provision of Public Goods: The Role of Complementarities between the public Good and Taxed Commodities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(1), pages 83-91, February.
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