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Labour tax reform, the good jobs and the bad jobs

Kleven, Henrik Jacobsen and Sorenson, Peter Birch (2004) Labour tax reform, the good jobs and the bad jobs. Scandinavian Journal of Economics, 106 (1). pp. 45-64. ISSN 1467-9442

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Abstract

We analyse recent proposals to shift the tax burden away from low‐paid labour, assuming a dual labour market where the "good" high‐paying jobs are rationed. A shift in the tax burden from low‐paid to high‐paid workers has an ambiguous effect on the level of aggregate employment while the allocation of aggregate employment is further distorted. Even if the tax reform raises total employment, economic efficiency may be reduced because labour is reallocated from high‐productive to low‐productive jobs. We also find that opportunities for on‐the‐job search have important implications for the policy effects

Item Type: Article
Official URL: http://www.blackwell-synergy.com/loi/sjoe
Additional Information: © 2004 Blackwell
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: J - Labor and Demographic Economics > J4 - Particular Labor Markets > J42 - Monopsony; Segmented Labor Markets
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J21 - Labor Force and Employment, Size, and Structure
Sets: Collections > Economists Online
Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 05 Jun 2008 15:05
URL: http://eprints.lse.ac.uk/5431/

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