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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 0347-0520

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Identification Number: 10.1111/j.0347-0520.2004.t01-1-00347.x


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:
Additional Information: © 2004 Blackwell
Divisions: Economics
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: 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
Date Deposited: 05 Jun 2008 15:05
Last Modified: 16 May 2024 00:18

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