Changing the income tax progressivity in labour markets with collective wage bargaining generates a trade-off. On the one hand, higher progressivity distorts individual labour supply decisions at the hours-of-work margin, on the other hand, it reduces unemployment by exerting downward pressure...

Economic thought on climate policy as an instance of environmental regulation is strongly influenced by the principle of a uniform carbon price. Economists acknowledge that this principle breaks down in a “second-best” world with other distortions, such as taxes and market power in domestic...

We present a consistent microsimulation-AGE model combining the labour market AGE model PACE-L, data from the German Socio-Economic Panel and a discrete choice labour supply estimation. The model is used to analyse a reform that cuts the social assistance minimum income and lowers the transfer...

In the tax policy debate, differentiation of value-added taxes (VAT) is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects....

We present a model that integrates the discrete working time choice of heterogenous households into a general equilibrium setting where wages are determined by sectoral bargaining between firms and trade unions. The model is calibrated to German micro and macro data. We then use it to analyse a...