Wage setting and tax progressivity in dynamic general equilibrium |
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| Authors: | Aronsson, Thomas Lofgren, Karl-Gustaf Sjogren, Tomas |
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| Affiliation: | Department of Economics, University of Umeå, S-901 87 Umeå, Sweden |
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| Abstract: | This paper concerns the implications of progressive labor incometaxation for wage determination in dynamic general equilibrium.The main purpose is to analyze the general equilibrium effectsof increased tax progressivity in terms of the responses inthe real wage rate, employment, the capital stock, output andconsumption. Among the results, we find that increased tax progressivityincreases the real wage rate and decreases employment underboth union and competitive wage formation. |
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