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Financing Unemployment Benefits Through Fiscal Policies and Increasing Competition

Author

Listed:
  • Antonio Scialà
  • Riccardo Tilli

Abstract

This paper considers a model with labor market frictions and monopolistic competition in the goods market. It also introduces proportional income taxation and unemployment benefits with a balanced government budget constraint. The paper evaluates the effects of more competition and higher unemployment benefits. The findings reveal that more competition has a positive effect on employment and the government budget. Higher unemployment benefits can be financed by both higher tax rate and increasing competition. Further, liberalization policies could permit, (a) To avoid an increase in unemployment, if we allow some rise in the tax rate; or (b) To decrease unemployment keeping the tax rate unchanged.

Suggested Citation

  • Antonio Scialà & Riccardo Tilli, 2009. "Financing Unemployment Benefits Through Fiscal Policies and Increasing Competition," The IUP Journal of Public Finance, IUP Publications, vol. 0(1), pages 53-67, February.
    • Handle: RePEc:icf:icfjpf:v:07:y:2009:i:1:p:53-67
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    References listed on IDEAS

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    Cited by:

    1. Riccardo Tilli, 2015. "High speed and low speed structural reforms in the italian goods and labor market," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2015(103), pages 67-82.

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