TY  - RPRT
        AU  - Koskela, Erkki
        TI  - Analysis of Labor Tax Progression under Heterogeneous Domestic Labor Markets and Flexible Outsourcing
        PY  - 2010/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5313
        UR  - https://www.iza.org/publications/dp5313
        AB  - 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.
        KW  - heterogeneous domestic labor markets
KW  - wage bargaining
KW  - impacts of labor taxation
KW  - outsourcing
        ER  -