Arbeitspapier
Does the Wage Tax System cause Budget Deficits?
In this paper we investigate experimentally the functioning of a wage tax financed unemployment benefit system on the development of the budget deficit, unemployment, and some other indicators of economic performance in an international economy. We find support for the hypothesis that out-of-equilibrium price uncertainty affects the behavior of economic agents. Dueto uncertainty about prices risk-averse producers are hypothesized to be reluctant to employ inputs with the additional effect of too low wages and too high output prices. Our results support this hypothesis of a `risk-compensated price-mechanism'. We also find that the downward pressure on wages is exacerbated by an over-supply of labor by consumers. These observationscan explain the budget deficits we observe in the laboratory economies. Furthermore, we find that tax adjustments in order to facilitate a balancing of the budget has strong adverse effects on unemployment and real GDP.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. 00-094/1
- Klassifikation
-
Wirtschaft
Design of Experiments: General
Firm Behavior: Theory
Exchange and Production Economies
Welfare Economics: General
Fiscal Policy
National Deficit; Surplus
- Thema
-
Budget deficit
experiment
price uncertainty
unemployment benefit
wage tax
Arbeitslosenversicherung
Lohnsteuer
Haushaltsdefizit
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Riedl, Arno
van Winden, Frans A.A.M.
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2000
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Riedl, Arno
- van Winden, Frans A.A.M.
- Tinbergen Institute
Entstanden
- 2000
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