Flat Income Taxation, Redistribution and Labour Market Performance
Abstract: A flat tax rate on labour income has gained popularity in European countries. This paper assesses the attractiveness of such a flat tax in achieving redistributive objectives with the smallest distortions to employment. We do so by using a detailed applied general equilibrium model for the Netherlands. The model is empirically grounded in the data and encompasses decisions on hours worked, labour force participation, skill formation, wage bargaining between unions and firms, and a wide variety of institutional details. The simulations suggest that the replacement of the current tax system in the Netherlands by a flat rate will harm labour market performance if aggregate income inequality is contained. Only flat tax reforms that reduce redistribution will raise employment. This finding bolsters the notions from optimal tax literature regarding the equity-efficiency trade off and the superiority of non-linear taxes to obtain redistributive goals in an efficient way
- Location
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Deutsche Nationalbibliothek Frankfurt am Main
- Extent
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Online-Ressource
- Language
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Englisch
- Notes
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Postprint
begutachtet (peer reviewed)
In: Applied Economics ; 42 (2009) 25 ; 3209-3220
- Classification
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Wirtschaft
- Event
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Veröffentlichung
- (where)
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Mannheim
- (when)
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2009
- Creator
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Mooij, Ruud de
Jacobs, Bas
Folmer, Kees
- DOI
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10.1080/00036840802112356
- URN
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urn:nbn:de:0168-ssoar-242000
- Rights
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Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
- Last update
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14.08.2025, 11:01 AM CEST
Data provider
Deutsche Nationalbibliothek. If you have any questions about the object, please contact the data provider.
Associated
- Mooij, Ruud de
- Jacobs, Bas
- Folmer, Kees
Time of origin
- 2009
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