Umeå Economic Studies, Department of Economics, Umeå University
No 568:
Income Taxation, Commodity Taxation and Provision of Public Goods under Labor Market Distortions
Thomas Aronsson ()
and Tomas Sjögren
Abstract: This paper concerns optimal taxation and provision of a
public good in the context of the mixed tax problem, where the set of tax
instruments consists of a nonlinear income tax and linear commodity taxes.
The analysis is based on a two-type model with endogenous wage rates.
Contrary to previous studies, we allow for imperfect competition in the
labor market resulting from the influence of unions over wage formation.
The results imply that the employment effects associated with each policy
instrument are important to consider. In addition, the effective marginal
tax rate of the highest income earners may be either positive or negative.
Finally, if concern for employment and/or self-selection make the
government choose a lower level of unemployment income than it would
otherwise have done, it will to some extent compensate the unemployed by
providing more of the public good and via lower commodity taxes.
Keywords: Optimal taxation; provision of public goods; unemployment; (follow links to similar papers)
JEL-Codes: D60; H21; H40; J64; (follow links to similar papers)
31 pages, September 24, 2001
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
DownloadAsset.action?contentId=73928&languageId=3&assetKey=ues568 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Kjell-Göran Holmberg ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
