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Efficient taxation, wage bargaining and policy coordination
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
2004 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 88, no 12, 2711-2725 p.Article in journal (Refereed) Published
Abstract [en]

This paper is related to the literature on optimal nonlinear taxation under right-to-manage wage formation, and we assume that the fall-back profit facing firms during wage bargaining depends on the profit they can obtain if moving production abroad. The purpose is to study how policy coordination among countries can be used to increase the welfare level in comparison with an uncoordinated equilibrium. We consider coordinated policy reforms with respect to the marginal taxation of labor income, the unemployment benefit and the provision of a public good. The results show that policy coordination that leads to fewer hours of work per employee and/or a reduction of the unemployment benefit will increase welfare compared to the uncoordinated equilibrium.

Place, publisher, year, edition, pages
Elsevier, 2004. Vol. 88, no 12, 2711-2725 p.
Keyword [en]
Optimal taxation, Policy coordination, Union wage setting
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Research subject
URN: urn:nbn:se:umu:diva-16242DOI: 10.1016/j.pubeco.2004.01.003OAI: diva2:155915
Available from: 2008-04-24 Created: 2008-04-24 Last updated: 2012-08-28Bibliographically approved

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Aronsson, ThomasSjögren, Tomas
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