Effects of tax reforms in a shirking model with union bargaining
- Ríos, José Vicente
- García Martínez, José Ramón
Year of publication: 2004
Issue: 42
Type: Working paper
Sustainable development goals
Abstract
In this paper we introduce a progressive income tax in the shirking model with union bargaining presented by in Altenburg and Straub (2002). Indeed, we differentiate taxation on employees and employers for the fiscal policy analysis. The main results show that it is possible, with a constant revenue reform, to enhance employment by shifting the tax imposition towards lower firm taxation. And, that it is crucial to consider a proportional or progressive taxation on labour income in order to be able to analyse the effect on unemployment for a constant replacement rate.