Redundany payments for collective dismissals are incorporated into a Shapiro-Stiglitz model of efficiency wages. it is shown, that a fixed payment will lower wages, leave employment and welfare unaffected if there are no wage-dependent taxes, no additionalfiring costs and if unemployment...

In a world with risk-neutral agents, liability rules will only induce efficient behaviour if these rules impose the full (marginal) costs of an action on the parties. However, institutional restrictions or bilateral activity choices can prevent the full internalisation of costs. A mechanism is...

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...

In an efficiency wage economy with variable profits, a shift from payroll to employment taxes will reduce unemployment if the tax level is held constant at the initial wage. However, unemployment will rise if firms are constrained to zero profits in the long-run and if tax revenues are constant....