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Public provision of private goods and equilibrium unemployment
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
2005 (English)In: Finanzarchiv, ISSN 0015-2218, Vol. 61, no 3, 353-367 p.Article in journal (Refereed) Published
Abstract [en]

This paper deals with public provision of a private good in a two-type model with optimal nonlinear income taxation. We assume that the wage rates are determined by bargaining between unions and firms, meaning that the equilibrium is characterized by unemployment. The results show that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which may justify either more or less public provision than under perfect competition. The paper also addresses employment-related motives behind public provision of private goods.

Place, publisher, year, edition, pages
Tübingen, Germany: Mohr Siebeck , 2005. Vol. 61, no 3, 353-367 p.
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-2964DOI: 10.1628/001522105774979029OAI: oai:DiVA.org:umu-2964DiVA: diva2:141353
Available from: 2008-02-15 Created: 2008-02-15 Last updated: 2011-09-28Bibliographically approved
In thesis
1. Essays on redistribution and local public expenditures
Open this publication in new window or tab >>Essays on redistribution and local public expenditures
2008 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures.

Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods.

Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation.

Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base.

In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.

Place, publisher, year, edition, pages
Umeå: Nationalekonomi, 2008. 144 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 731
Keyword
optimal taxation, unemployment, durable goods, flypaper effects, intergovernmental relations, demand system, local government spending
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-1547 (URN)978-91-7264-514-1 (ISBN)
Public defence
2008-03-07, N200, Naturvetarhuset, Umeå Universitet, Umeå, 10:15
Opponent
Supervisors
Available from: 2008-02-15 Created: 2008-02-15Bibliographically approved

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Aronsson, ThomasSjögren, Tomas

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