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Good Jobs, Bad Jobs and Redistribution

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  • Lommerud, Kjell Erik
  • Sandvik, B.

Abstract

We analyse the question of optimal taxation in a dual economy, when the policy-maker is concerned about the distribution of labour income. Income inequality is caused by the presence of sunk capital investments, which creates a ?good jobs? sector due to the capture of quasi-rents by trade unions. With strong unions and high planner preference for income equality the optimal policy is a combination of investment subsidies and progressive income taxation. If unions are weaker, the policy-maker may instead choose to tax investment.

Suggested Citation

  • Lommerud, Kjell Erik & Sandvik, B., 2003. "Good Jobs, Bad Jobs and Redistribution," CEPR Discussion Papers 4115, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4115
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    Cited by:

    1. repec:kap:iaecre:v:13:y:2007:i:2:p:146-156 is not listed on IDEAS
    2. Kessing, Sebastian G. & Konrad, Kai A., 2006. "Union strategy and optimal direct taxation," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 393-402, January.
    3. Jörg Lingens & Klaus Wälde, 2009. "Pareto-Improving Unemployment Policies," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(2), pages 220-245, June.
    4. Belan, Pascal & Carré, Martine & Gregoir, Stéphane, 2010. "Subsidizing low-skilled jobs in a dual labor market," Labour Economics, Elsevier, vol. 17(5), pages 776-788, October.
    5. Merkl, Christian & Snower, Dennis J., 2008. "Escaping the unemployment trap: The case of East Germany," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 542-556, December.
    6. Hartmut Egger & Udo Kreickemeier, 2017. "Redistributing Gains from Globalization," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 11, pages 307-337, World Scientific Publishing Co. Pte. Ltd..
    7. repec:zbw:ifwkwp:1309 is not listed on IDEAS
    8. Mireia Valverde & Gerard Ryan & María Gorjup, 2007. "An Examination of the Quality of Jobs in the Call Center Industry," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(2), pages 146-156, May.
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    10. Silvia Rocha-Akis, 2012. "The Pain and Gain of Offshoring: The Effects of Tax Progression in a Segmented Labour Market," CESifo Working Paper Series 3739, CESifo.
    11. Marco de Pinto, 2012. "The Redistribution of Trade Gains and the Equity-Efficiency Trade-Off," IAAEU Discussion Papers 201206, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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    More about this item

    Keywords

    Rent sharing; Segmented labour markets; Optimal taxation; Redistribution;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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