The employment effects of corporate income tax and the bargaining power of labor unions

Jung Joo La

Economic Analysis and Policy, 2024, vol. 83, issue C, 243-259

Abstract: This study analyzes how the relationship between corporate income tax and employment varies according to the bargaining power of labor unions. To this end, we use a dynamic general equilibrium model to examine corporate income tax and the bargaining power of labor unions based on a span-of-control model. Previous studies on the relationship between corporate income tax and employment are inconclusive and do not examine the role of the bargaining power of labor unions in this relationship. Calibrated results obtained using data from Korea show that a reduction in only the corporate income tax rate slightly decreases total employment, but a reduction in the corporate income tax rate accompanied by a decline in the bargaining power of labor unions significantly increases total employment.

Keywords: Bargaining power of labor unions; Corporate income tax; Employment (search for similar items in EconPapers)
JEL-codes: E24 H20 J52 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:83:y:2024:i:c:p:243-259

DOI: 10.1016/j.eap.2024.06.020

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