Collective Bargaining With Pre‐Donation May Lead to Tax Evasion in the Labor Market

Ismail Saglam

Scottish Journal of Political Economy, 2025, vol. 72, issue 5

Abstract: We consider a collective bargaining model in the presence of a government that can tax corporate income. Using this model, we investigate whether workers or the firm can manipulate the bargaining equilibrium, with the help of Sertel's (1992a) pre‐donation idea, by committing to transfer a part of their would‐be payoffs to the other party. We show that making pre‐donation is beneficial for workers but harmful to the firm. Moreover, the optimal pre‐donation of workers enables them to fully extract the tax revenue that the government could obtain in the absence of pre‐donation while keeping the welfare of the firm unchanged.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/sjpe.70018

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:72:y:2025:i:5:n:e70018

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0036-9292

Access Statistics for this article

Scottish Journal of Political Economy is currently edited by Tim Barmby, Andrew Hughes-Hallett and Campbell Leith

More articles in Scottish Journal of Political Economy from Scottish Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().