Arbeitspapier

Input versus Output Taxation in an Experimental International Economy

This paper is concerned with a policy oriented macroeconomic experiment involving an 'international' economy with a relatively small 'home' country and a large 'foreign' country. It compares the economic performance of two alternative tax systems as a means to finance unemployment benefits: a sales-tax-cum-labor-subsidy system versus a wage tax system. The two systems are applied to the home country, while the wage tax system always obtains in the foreign country. In stark contrast with expectations of experts the sales tax system clearly outperforms the wage tax system, using standard economic indicators. It is argued that producers' reluctance to incur costs up-front while being uncertain about product prices can explain this outcome. Several pieces of evidence are provided to support this claim. The results strongly suggest that behavioral aspects have to be taken into account also in applied macroeconomic models.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 1344

Klassifikation
Wirtschaft
General Economics: General
Fiscal Policy
Information, Knowledge, and Uncertainty: General
Taxation, Subsidies, and Revenue: General
Firm Behavior: Theory
Design of Experiments: Laboratory, Individual
Design of Experiments: General
Thema
laboratory experiment
wage tax
sales tax
macroeconomic policy
behavioral economics
Lohnsteuer
Umsatzsteuer
Arbeitslosenversicherung
Steuerwettbewerb
Zwei-Länder-Modell
Theorie

Ereignis
Geistige Schöpfung
(wer)
Riedl, Arno
van Winden, Frans
Ereignis
Veröffentlichung
(wer)
Institute for the Study of Labor (IZA)
(wo)
Bonn
(wann)
2004

Handle
Letzte Aktualisierung
20.09.2024, 08:23 MESZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Riedl, Arno
  • van Winden, Frans
  • Institute for the Study of Labor (IZA)

Entstanden

  • 2004

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