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Tax Incidence In A Model With Efficiency Wages And Unemployment

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  • Vassilis T Rapanos

    (Department of Economics, University of Athens)

Abstract

The purpose of the present paper is to examine the effects of taxation on income distribution in a model with efficiency wages and involuntary unemployment. Central to the efficiency-wage theory is the hypothesis that firms may set wages above market-clearing levels, whenever the productivity of labor depends positively on the real wage paid by the firm. Within a two sector general equilibrium model we study the incidence of factor and commodity taxes on income distribution. Our findings are quite different from the results derived by the traditional neoclassical analysis, originally developed by Harberger.

Suggested Citation

  • Vassilis T Rapanos, 2004. "Tax Incidence In A Model With Efficiency Wages And Unemployment," Public Economics 0404001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwppe:0404001
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    References listed on IDEAS

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    1. Fullerton, Don & Metcalf, Gilbert E., 2002. "Tax incidence," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872, Elsevier.
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    12. Bo Sandemann Rasmussen, 2002. "Efficiency Wages and the Long-Run Incidence of Progressive Taxation;," Journal of Economics, Springer, vol. 76(2), pages 155-175, June.
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    Cited by:

    1. Heutel, Garth & Zhang, Xin, 2021. "Efficiency wages, unemployment, and environmental policy," Energy Economics, Elsevier, vol. 104(C).

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    More about this item

    Keywords

    tax incidence; efficiency wages;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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