Beyond the Labor Income Tax Wedge: The Unemployment-Reducing Effect of Tax Progressivity

Claudio Lucifora, Simone Moriconi

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

7 Citazioni (Scopus)


In this paper, we argue that, 1 for a given overall level of labour income taxation, a more progressive tax schedule increases employment. From a theoretical point of view, higher progressivity increases overall employment through a wage moderating effect and also because employment of low-paid workers is more elastic to wages. We test these theoretical predictions on a panel of 21 OECD countries over 1998–2008. Controlling for the burden of taxation at the average wage, our estimates suggest that a more progressive tax schedule reduces the unemployment rate and increases the employment rate. These findings are confirmed when we account for the potential endogeneity of both average taxation and progressivity. Overall, our results suggest that policy-makers should not only focus on the detrimental effects of tax progressivity on in-work effort, but also consider the employment-enhancing effects.
Lingua originaleEnglish
pagine (da-a)N/A-N/A
RivistaInternational Tax and Public Finance
Stato di pubblicazionePubblicato - 2015


  • Tax Progressivity
  • Unemployment


Entra nei temi di ricerca di 'Beyond the Labor Income Tax Wedge: The Unemployment-Reducing Effect of Tax Progressivity'. Insieme formano una fingerprint unica.

Cita questo