This paper shows that outsourcing of parts of the workforce in unionized firms leads to wage moderation and as long as the share of the outsourced workforce is not too large, this wage-moderation effect on domestic employment outweighs the direct substitution effect so that domestic employment...

This paper studies the implications of introducing child care in the human capital production function when assessing the effects of labor income taxation on growth. We develop an OLG model where formal schooling and child care enter the human capital production function as complements and we...

Social values shape policy outcomes. We examine the role of postmaterialism, a widely used concept in the social sciences, for the mix of capital and labour taxation chosen by a society. Following political scientist Inglehart, we define the degree of postmaterialism as the relative importance...

In European Welfare States, low-skilled workers are typically unionized, while the wage formation of high-skilled workers is more competitive. To focus on this aspect, we analyze how flexible international outsourcing and labour taxation affect wage formation, employment and welfare in dual...

This paper investigates empirically the role of taxes on labor for the stock of expatriates and the migration flows of skilled workers. Given the increasing mobility of labour, especially of high-skilled people and expatriates, it is interesting to see to what extent labour income taxes and...

In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work and to invest in human capital....

Assuming isoelastic returns to education and an endogenous supply of qualified and nonqualified labour, it is shown to be second-best efficient not to distort the choice of education. Furthermore, taxation should set incentives so that qualified labour is substituted for nonqualified labour. As...

The gross wage income distributions for different groups of taxpayers in 2004 are used to derive wage income distributions for 20072013. By applying the rules of income taxation, wage income tax revenues are deduced. Given the tax rate structure introduced in 2007, the average tax rates and the...

The income tax rate structure introduced in 2007 was changed in 2009. The income tax rates will be lowered in 2010, too. The effects on the wage income tax revenues and on the incentives to work are analyzed. It turns out that "bracket creep" will remain a problem in Germany.