Taxes in an efficiency wage economy

Laszlo Goerke

No 335, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: Various taxes influence wage and employment outcomes in efficiency wage models. These findings are extended by incorporating more comprehensive tax functions, additional tax parameters, union-firm wage bargaining, and balanced budget restrictions. Moreover, the importance of different effort functions is evaluated. It is shown that higher marginal tax rates, holding constant the level of taxes, reduce wages and increase employment. Higher level of taxes on income, labour cost and value-added can raise unemployment.

Keywords: efficiency wages; effort function; taxes; unemployment; wage bargaining (search for similar items in EconPapers)
JEL-codes: E24 H24 H25 J41 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (10)

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