We analyse recent proposals to shift the tax burden away from low-paid labour, assuming a dual labour market where the "good"high-paying jobs are rationed. A shift in the tax burden from low-paid to high-paid workers has an ambiguous effect on the level of aggregate employment while the...

More progressive income taxes raise employment in models of imperfectly competitive labour markets. However, this prediction is not robust to modifications of the analytical structure. For example, in an efficiency wage setting, more progressive taxes reduce profits. This induces firms to exit...

More progressive income taxes raise employment in models of imperfectly competitive labour markets. However, this prediction is not robust to modifications of the analytical structure. For example, in an efficiency wage setting, more progressive taxes reduce profits. This induces firms to exit...