Tax Coordination and Unemployment

Clemens Fuest and Bernd Huber

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This paper analyses the implications of unemployment for fiscal competition and tax coordination among small open economies. Unemployment is modeled as resulting from wage bargaining. The analysis focuses on the effect of labour and capital tax coordination on welfare. We show that, while coordinated capital and labour tax increases unambiguously raise welfare if labour markets are competitive, different results emerge if labour markets are unionised. It turns out that coordinated capital and labour tax increases may reduce welfare.

Date: 1999
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Citations: View citations in EconPapers (42)

Published in International Tax and Public Finance 1 6(1999): pp. 7-26

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Journal Article: Tax Coordination and Unemployment (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:20298

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