Optimal capital taxation, labour unions, and the hold-up problem

Palokangas, T. (2014). Optimal capital taxation, labour unions, and the hold-up problem. Labour 28 (4) 359-375. 10.1111/labr.12041.

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This document examines optimal capital taxation with wage-setting labour unions when the government taxes consumption, labour, and capital. The results are as follows. If unions can commit themselves to particular wages for a long period, then there is no hold-up problem. Otherwise, the hold-up problem creates a positive link from capital accumulation to the wage. The optimal labour subsidy is positive and greater in the presence than in the absence of the hold-up problem. The optimal capital subsidy is zero in the absence, but positive in the presence of the hold-up problem.

Item Type: Article
Research Programs: Advanced Systems Analysis (ASA)
Bibliographic Reference: Labour; 28(4):359-375 (December 2014) (Published online 19 October 2014)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:50
Last Modified: 27 Aug 2021 17:39
URI: https://pure.iiasa.ac.at/10816

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