Hungerbuelher, Mathias
We explain the positive correlation between union power and tax progressivity from a normative point of view by integrating labour market frictions and union power in an optimal taxation framework. We find that unions and redistributive taxation are complementary in the sense that they both create inefficiencies that weaken each other. We find that strong unions increase welfare and efficiency when the government faces an adverse selection problem when redistributing income.
Bibliographic reference |
Hungerbuelher, Mathias. The Impact of Union-Power on the Optimal Income Tax Schedule. ECON Discussion Papers ; 2004/83 (2004) |
Permanent URL |
http://hdl.handle.net/2078.1/5834 |