@TechReport{iza:izadps:dp5313,
            	author={Koskela, Erkki},
            	title={Analysis of Labor Tax Progression under Heterogeneous Domestic Labor Markets and Flexible Outsourcing},
            	year={2010},
	month={Nov},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={5313},
            	url={https://www.iza.org/publications/dp5313},
	abstract={What are the impacts of labor tax reform on wage setting and employment to keep the relative tax burden per low-skilled and high-skilled workers constant in the case of heterogeneous domestic labor markets, i.e. imperfect competition in low-skilled labor and perfect competition in high-skilled labor in the presence of outsourcing? A higher degree of tax progression by raising the wage tax and the tax exemption for the low-skilled workers will decrease the wage rate and increase labor demand of low-skilled workers, whereas it will decrease (increase) employment of high-skilled workers in CES utility function when the elasticity of substitution between consumption and leisure is higher (lower) than one. A higher degree of wage tax progression for the high-skilled worker will have no effect on the high-skilled wage in the presence of CES utility function.},
	keywords={heterogeneous domestic labor markets;wage bargaining;impacts of labor taxation;outsourcing},
            }