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Do taxes cause unemployment?

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  • Vincent (Vincent Peter) Hogan

Abstract

In the long run the economic incidence of a tax is unaffected by whether a tax is levied on workers, consumers or firms. In the short run, however, with wages and prices not fully flexible the incidence may be different. We test this hypothesis using aggregate time series data and examine the implications of tax incidence for the level and persistence of unemployment.

Suggested Citation

  • Vincent (Vincent Peter) Hogan, 2001. "Do taxes cause unemployment?," Working Papers 200101, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200101
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    File URL: http://hdl.handle.net/10197/924
    File Function: First version, 2001
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    References listed on IDEAS

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    1. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
    2. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
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    5. Hogan, Vincent, 2004. "The welfare cost of taxation in a labour market with unemployment and non-participation," Labour Economics, Elsevier, vol. 11(4), pages 395-413, August.
    6. repec:bla:scandj:v:92:y:1990:i:2:p:135-65 is not listed on IDEAS
    7. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    8. repec:bla:econom:v:53:y:1986:i:210(s):p:s1-22 is not listed on IDEAS
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    Cited by:

    1. Alvin Ó Murchú, 2002. "Tax policy and OECD unemployment," Working Papers 200231, School of Economics, University College Dublin.

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