Labor Tax Progressivity, Wage Determination, and the Relative Wage Effect

12 Pages Posted: 30 Jun 2002

See all articles by Giorgio Brunello

Giorgio Brunello

University of Padua - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Daniela Sonedda

University College London - Department of Economics; Universita degli Studi del Piemonte Orientale "Amedeo Avogadro" - Dipartimento di Scienze Economiche e Metodi Quantitativi

Date Written: May 2002

Abstract

We model a two sector economy with unionized labor markets and competitive product markets, where workers and unions care about their relative wages, and show that the presence of a relative wage concern could help generation a positive relationship between tax progressivity and wage pressure.

Keywords: Progressive Taxation, Relative Wage Effect

JEL Classification: H24, J31

Suggested Citation

Brunello, Giorgio and Sonedda, Daniela, Labor Tax Progressivity, Wage Determination, and the Relative Wage Effect (May 2002). Available at SSRN: https://ssrn.com/abstract=316764 or http://dx.doi.org/10.2139/ssrn.316764

Giorgio Brunello (Contact Author)

University of Padua - Department of Economics ( email )

via Del Santo 33
35121 Padova
Italy
+39 049 827 4223 (Phone)
+39 049 827 4221 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Daniela Sonedda

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

Universita degli Studi del Piemonte Orientale "Amedeo Avogadro" - Dipartimento di Scienze Economiche e Metodi Quantitativi ( email )

Via Perrone 18
28100 Novara
Italy

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