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Does the Composition of Wage and Payroll Taxes Matter Under Nash Bargaining

Author

Listed:
  • Koskela, E.
  • Schob, R.

Abstract

According to conventional wisdom the total taxe wedge, which is the sum of wage and payroll taxes, is sufficient to specify the distortion of wage formation caused by labour taxation. Using Nash bargaining approach to wage negotiations this paper shows that conventional wisdom is valid for equal rax bases, e.g., when the tax exemption takes the form of a tax credit.

Suggested Citation

  • Koskela, E. & Schob, R., 1998. "Does the Composition of Wage and Payroll Taxes Matter Under Nash Bargaining," University of Helsinki, Department of Economics 443, Department of Economics.
    • Handle: RePEc:fth:helsec:443
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    References listed on IDEAS

    as
    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Koskela, Erkki & Vilmunen, Jouko, 1996. "Tax progression is good for employment in popular models of trade union behaviour," Labour Economics, Elsevier, vol. 3(1), pages 65-80, August.
    3. Holm, Pasi & Honkapohja, Seppo & Koskela, Erkki, 1994. "A monopoly-union model of wage determination with capital and taxes: An empirical application to the Finnish manufacturing," European Economic Review, Elsevier, vol. 38(2), pages 285-303, February.
    4. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, vol. 52(1), pages 1-29, August.
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    More about this item

    Keywords

    TAXES ; WAGES ; BARGAINING;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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