this decision into account. It is shown that the employment effects of a linear income tax are not altered qualitatively by …

) nonparticipation and (involuntary) unemployment are endogenous. The optimal employment tax rate is given by an inverse employment … elasticity rule. This rule depends on the global response of the employment rate, which depends not only on the participation …. For plausible values of the parameters, our matching environment induces much lower employment tax rates than the usual …

restructuring of labour taxation from employers to workers in the domestic country is good for employment in both countries, when … revenue neutral restructuring of labour taxation has no employment effect in either country … and is thus bad for employment under competitive labour markets. This paper studies the effects of labour taxes in a …