Unemployment Benefits and Redistributive Taxes in the Presence of Labor Quality Externalities

Research output: Working paperDiscussion paperOther research output

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Abstract

In this paper, a worker s productivity is assumed to depend on his own quality and on the average quality of other employed workers.In this setting, unemployment benefits that induce low quality workers to leave the labor force have important efficiency as well as equity implications.In addition to unemployment benefits, the authorities can use a proportional income tax and lump sum transfers.The desirability of tax and transfer policy is considered from the perspectives of a utilitarian social planner, and of an electorate consisting of employed and unemployed workers.Employed workers may be in favor of unemployment benefits, even though they do not benefit directly.If unemployment benefits are financed by lump sum taxes, then relatively high unem-ployment benefits may be favored by a coalition of the unemployed and of high quality employed workers.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages24
Volume1996-15
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-15

Fingerprint

Tax
Labor quality
Workers
Externalities
Unemployment benefits
Equity
Tax policy
Productivity
Authority
Transfer policy
Labor force
Income tax

Keywords

  • unemployment
  • quality
  • income tax
  • income distribution
  • labour models

Cite this

Huizinga, H. P. (1996). Unemployment Benefits and Redistributive Taxes in the Presence of Labor Quality Externalities. (CentER Discussion Paper; Vol. 1996-15). Tilburg: Macroeconomics.
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Huizinga, HP 1996 'Unemployment Benefits and Redistributive Taxes in the Presence of Labor Quality Externalities' CentER Discussion Paper, vol. 1996-15, Macroeconomics, Tilburg.

Unemployment Benefits and Redistributive Taxes in the Presence of Labor Quality Externalities. / Huizinga, H.P.

Tilburg : Macroeconomics, 1996. (CentER Discussion Paper; Vol. 1996-15).

Research output: Working paperDiscussion paperOther research output

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