Brunello, Giorgio; Parisi, Maria Laura; Sonedda, Daniela - 2002
We study the empirical relationship between labor taxation and pretax wages in Italy. We find that higher tax … progressivity increases pretax wages. To explain this result, we introduce in an informal way a relative wage effect and argue that … employment. The evidence on the effect of the average income tax rate on pretax wages is more mixed, but it also points to the …