Benefit Levels, Tax Progression and Employment

John P. Hutton and Anna Ruocco ()

FinanzArchiv: Public Finance Analysis, 2002, vol. 58, issue 2, 121-139

Abstract: This paper shows that increases in direct tax progression tend to reduce wages and increase welfare and employment, even in a model allowing for labour supply effects. The employment effect is reversed when benefit levels are low, however. The model shows the different impacts on full- and part-time workers, and on men and women. An a.g.e. model for the UK is also simulated, with an efficiency wage sector with training costs generating unemployment effects.

JEL-codes: H30 J20 (search for similar items in EconPapers)
Date: 2002
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