Munich Personal RePEc Archive

Taxes and benefits in a non-linear wage equation

Graafland, J.J. and Huizinga, F.H. (1998): Taxes and benefits in a non-linear wage equation. Published in: De Economist , Vol. 147, No. 1 (1999): pp. 39-54.

[img]
Preview
PDF
MPRA_paper_21076.pdf

Download (103kB) | Preview

Abstract

This paper develops a theoretical wage bargaining model, which yields a non-linear wage equation with a positive long term impact of taxes on wages as a special case. The elasticity of the replacement rate depends on the unemploy¬ment rate. The wage equation is estimated on time series data of the Netherlands. By distinguishing between short-term and long-term coefficients, we reconcile the divergence between theoretical predictions and empirical estimates of various components in the tax wedge. The last section summarizes the main findings and reviews some policy implications.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.