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Taxes in an efficiency wage economy

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  • Goerke, Laszlo

Abstract

Various taxes influence wage and employment outcomes in efficiency wage models. These findings are extended by incorporating more comprehensive tax functions, additional tax parameters, union-firm wage bargaining, and balanced budget restrictions. Moreover, the importance of different effort functions is evaluated. It is shown that higher marginal tax rates, holding constant the level of taxes, reduce wages and increase employment. Higher level of taxes on income, labour cost and value-added can raise unemployment.

Suggested Citation

  • Goerke, Laszlo, 1997. "Taxes in an efficiency wage economy," Discussion Papers, Series II 335, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:335
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Goerke, Laszlo, 1999. "Value-added Tax versus Social Security Contributions," IZA Discussion Papers 55, Institute of Labor Economics (IZA).
    2. Goerke, Laszlo, 2000. "On the structure of unemployment benefits in shirking models," Labour Economics, Elsevier, vol. 7(3), pages 283-295, May.
    3. Laszlo Goerke, 2006. "Earnings‐related Severance Pay," LABOUR, CEIS, vol. 20(4), pages 651-672, December.
    4. Bohringer, Christoph & Boeters, Stefan & Feil, Michael, 2005. "Taxation and unemployment: an applied general equilibrium approach," Economic Modelling, Elsevier, vol. 22(1), pages 81-108, January.
    5. Goerke, Laszlo, 2000. "Employment Effects of Labour Taxation in an Efficiency Wage Model with Alternative Budget Constraints and Time Horizons," IZA Discussion Papers 148, Institute of Labor Economics (IZA).
    6. Goerke, Laszlo, 1998. "Bismarck versus Beveridge: Flat- and earnings-related unemployment insurance in an efficiency wage framework," Discussion Papers, Series I 291, University of Konstanz, Department of Economics.
    7. Mbekeni Lutho & Phiri Andrew, 2020. "South African Unemployment in the Post-Financial Crisis Era: What are the Determinants?," Folia Oeconomica Stetinensia, Sciendo, vol. 20(2), pages 230-248, December.
    8. Boeters, Stefan & Böhringer, Christoph & Feil, Michael, 2002. "Taxation and unemployment: an applied general equilibrium approach for Germany," ZEW Discussion Papers 02-39, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    efficiency wages; effort function; taxes; unemployment; wage bargaining;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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