Progressive Taxation and Wage Setting when Unions Strategically Interact

Giorgio Brunello and Daniela Sonedda

No 17, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: In a multisector economy with unionized labor markets, the interdependence of union wage claims - typical of industrial bargaining - affects the relationship between tax progressivity and wage pressure, which varies in a nonlinear fashion with the nature of the wage bargain, and can be hump-shaped. Our empirical analysis of 20 OECD countries for the period 1997-2004 shows that higher tax progressivity increases pre-tax wages (and unemployment) in countries characterized by industry level wage bargaining, and reduces them in countries with local or fully centralized bargaining.

JEL-codes: H24 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2006-05
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-pub
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Journal Article: Progressive taxation and wage setting when unions strategically interact (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0017

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