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Tax Coordination and Unemployment

Author

Listed:
  • Clemens Fuest
  • Bernd Huber
Abstract
This paper analyses the implications of unemloyment for fiscal competition and tax coordination among small open economies. Unemployment is modeled as resulting from wage bargaining. The analysis focuses on the effect of labour and capital tax co-ordination on welfare. We show that, while coordinated capital and labour tax increases unambiguously raise welfare if labour markets are competitive, different results emerge if labour markets are unionised. It turns out that co-ordinated capital and labour tax increases may reduce welfare.

Suggested Citation

  • Clemens Fuest & Bernd Huber, "undated". "Tax Coordination and Unemployment," EPRU Working Paper Series 97-26, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:97-26
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    References listed on IDEAS

    as
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