Income-and Energy Taxation for Redistribution in General Equilibrium

Felix Fitzroy

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: In a 3-factor GE-model with a continuum of ability, the employed choose optimal labour supply, and equilibrium unemployment is determined by benefits funded by wage-and energy-taxes. Aggregate labour and the net wage may increase or decrease with taxation (and unemployment), and conditions for a reduction in redistributive wage-taxes to be Pareto-improving are derived. A small energy tax always raises the net wage, providing the wage tax is reduced to maintain constant employment and a balanced budget. High ability households prefer higher energy taxes when externalities are uniformly distributed and non-distorting.

Keywords: Taxes; Redistribution; General Equilibrium; Welfare; Energy; Externalities (search for similar items in EconPapers)
Date: 1993-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9304

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