Unemployment and labour market rigidities in OECD countries: the impact of taxes

This paper investigates unemployment and labour market rigidities in OECD countries in 1983?1994. The central issue is the taxation-unemployment relationship and whether this relationship is exogenous or simultaneously determined. Hausman specification tests indicate that the impact of taxation on short-term unemployment is positive and exogenous whereas the relationship between taxation and long-term unemployment is simultaneously determined. Correcting for this simultaneity results in a much higher, significant and positive regression coefficient for the impact of taxation. Thus, high taxation seems to be one of the main determinants of long-term unemployment.

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Year of publication:	2000
Authors:	Heitger, Bernhard
Publisher:	Kiel : Kiel Institute for the World Economy (IfW)
Subject:	Arbeitslosigkeit \| Arbeitsmarkt \| Steuerwirkung \| OECD-Staaten \| Unemployment \| labour market institutions \| taxation

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Series:	Kiel Working Paper ; 985
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	859873897 [GVK] hdl:10419/17919 [Handle] RePEc:zbw:ifwkwp:985 [RePEc]
Classification:	E24 - Employment; Unemployment; Wages
Source:	EconStor