Labor Markets and Capital Tax Competition
16 Pages Posted: 2 Jul 2010
Date Written: June 30, 2010
Ogawa et al. (2006) analyze capital tax competition in a fixed-wage approach and show that the original results of Zodrow and Mieszkowski (1986) are not preserved in the presence of unemployment. In the present paper we challenge this view and investigate capital tax competition for some arbitrary institutional setting of the labor market. We find that if the labor market is characterized by some efficient bargaining solution, the results of Zodrow and Mieszkowski (1986) are preserved.
Keywords: capital tax competition, unemployment, efficient bargains
JEL Classification: H21, J51
Suggested Citation: Suggested Citation