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Benefit Levels, Tax Progression and Employment

Author

Listed:
  • John P. Hutton
  • Anna Ruocco

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.

Suggested Citation

  • John P. Hutton & Anna Ruocco, 2002. "Benefit Levels, Tax Progression and Employment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(2), pages 121-139, February.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200202)58:2_121:bltpae_2.0.tx_2-r
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    More about this item

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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