Green Tax Reform and the Laffer curve in labour market models: A brief note

This paper shows that the dividing lines between the three possible outcome of a revenue-neutral ecological tax reform – double dividend, employment failure, environmental failure – can be ordered in terms of the slope of the wage curve and the slope of the Laffer curve in an efficiency wage model. A comparison of the efficiency wage model with bargaining models shows that the relation between the three outcomes and the slope of the Laffer curve is not the same but rather the opposite in the two models.