Taxation, Unemployment and Working Time in Models of Economic Growth
This paper combines collective bargaining over wages and working time with models of endogenous and neoclassical growth. Public expenditure is funded by taxes on capital and labour supplied by infinitely-lived households in a closed economy. Taxes on labour are generally inefficient in both growth models, there is a “dynamic Laffer Curve”, and employment is increased by a reduction of working hours below the collective bargaining level – except in the case of a monopoly union. Although growth is maximised by competitive (efficient) hours, welfare-optimal working time is below the collective bargain when union are ‘too weak’, and vice-versa.
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- Francesco Daveri & Guido Tabellini, .
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122, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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"Employment and Distributional Effects of Restricting Working Time,"
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"On the Analytics of the Dynamic Laffer Curve,"
Working Paper Series
2000:5, Uppsala University, Department of Economics.
- Felix R. FitzRoy & Michael Funke & Michael A. Nolan, 1999. "Working Time, Taxation and Unemployment," Discussion Paper Series, Department of Economics 199901, Department of Economics, University of St. Andrews.
- Agell, Jonas & Persson, Mats, 2000. "On Analytics of the Dynamic Laffer Curve," Seminar Papers 682, Stockholm University, Institute for International Economic Studies.
- G Houpis, 1993. "The Effect of Lower Hours of Work on Wages and Employment," CEP Discussion Papers dp0131, Centre for Economic Performance, LSE.
- Terry J. Fitzgerald, 1998. "Reducing working hours: a general equilibrium analysis," Working Paper 9801, Federal Reserve Bank of Cleveland.
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