TAX INCIDENCE IN A MODEL WITH EFFICIENCY WAGES AND UNEMPLOYMENT

Vassilis T Rapanos
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Vassilis T Rapanos: Department of Economics, University of Athens

Public Economics from EconWPA

Abstract: The purpose of the present paper is to examine the effects of taxation on income distribution in a model with efficiency wages and involuntary unemployment. Central to the efficiency-wage theory is the hypothesis that firms may set wages above market-clearing levels, whenever the productivity of labor depends positively on the real wage paid by the firm. Within a two sector general equilibrium model we study the incidence of factor and commodity taxes on income distribution. Our findings are quite different from the results derived by the traditional neoclassical analysis, originally developed by Harberger.

Keywords: tax incidence; efficiency wages (search for similar items in EconPapers)
JEL-codes: J3 H22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2004-04-06
Note: Type of Document - pdf; pages: 18
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0404001

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