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Taxing Excess Wages to Promote Employment: The Case of Poland 1990-1991

Alain de Crombrugghe and Grégory de Walque

Working Papers from Notre-Dame de la Paix, Sciences Economiques et Sociales

Abstract: The paper analyzes theoretically and empirically how a firm level tax calculated on the average wage relative to a pre-set norm may promote employment. The theoretical model generalizes the discussion to the case of a subsidization of the average wage dept under the norm chosen by the government. We assume given labor demand and a monopoly union negotiating wages at the firm level in order to maximize the part of the wage bill exceeding the alternative wage.

Keywords: TAXATION; EMPLOYMENT (search for similar items in EconPapers)
JEL-codes: E24 H25 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997
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