The impact of Union Power on the Optimal Income Tax Schedule

Hungerbuehler Mathias
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Hungerbuehler Mathias: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and ERMES, Université Paris II
Authors registered in the RePEc Author Service: Mathias Hungerbühler ()

No 2004034, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We explain the positive correlation between union power and tax progressivity from a normative point of view by integrating labour market frictions and union power in an optimal taxation framework. We find that unions and redistributive taxation are complementary in the sense that they both create inefficiencies that weaken each other. We find that strong unions incease welfare and efficiency when the government faces in adverse selection problem when redistributing income.

Keywords: Optimal Income Taxation; Unions; Matching (search for similar items in EconPapers)
JEL-codes: D82 H21 J51 J64 (search for similar items in EconPapers)
Date: 2004-10-01
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2004034

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