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The Output Effects of Labor Income Taxes in OECD Countries

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  • Daniela Sonedda

    (University of Piemonte Orientale and CRENoS, daniela.sonedda@eco.unipmn.it)

Abstract

This article considers the relationship between labor income taxes and output. An illustrative model indicates that the sign of the output effect of labor taxation policies is ambiguous and depends not only on the technology parameters but also on the taxation level. The empirical evidence for fifteen Organisation for Economic Co-operation and Development (OECD) countries over the period 1974—97 shows that the effect is heterogeneous across countries both in the short run and in the long run when considering the average tax rate. We also find a common positive and significant long-run relationship for the marginal tax rate.

Suggested Citation

  • Daniela Sonedda, 2009. "The Output Effects of Labor Income Taxes in OECD Countries," Public Finance Review, , vol. 37(6), pages 686-709, November.
    • Handle: RePEc:sae:pubfin:v:37:y:2009:i:6:p:686-709
    DOI: 10.1177/1091142109343807
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    References listed on IDEAS

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    Cited by:

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    2. Sorana Vatavu & Oana-Ramona Lobont & Petru Stefea & Daniel Brindescu-Olariu, 2019. "How Taxes Relate to Potential Welfare Gain and Appreciable Economic Growth," Sustainability, MDPI, vol. 11(15), pages 1-16, July.

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