Labour tax policies and strategic offshoring under unionised oligopoly

Silvia Rocha-Akis

Publication: Working/Discussion PaperWU Working Paper

Abstract

In a model with a unionised immobile labour force we analyse how labour taxes and transfers towards unemployed workers are optimally cho- sen when a welfare maximising government faces oligopolistic and partly mobile firms. We consider two polar types of government: one whose objective consists of maximising the sum of domestic producer's and con- sumers' surplus and one that aims at maximising employed and unem- ployed workers' payoffs. We show that depending on the combination of foreign labour costs, the degree of domestic union bargaining power, and the sunk costs of relocation, the former type of government may choose to set taxes so as to induce an outward relocation of production. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherSFB International Tax Coordination, WU Vienna University of Economics and Business
Publication statusPublished - 2006

Publication series

NameDiscussion Papers SFB International Tax Coordination
No.17

WU Working Paper Series

  • Discussion Papers SFB International Tax Coordination

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