Details
| Original language | English |
|---|---|
| Pages (from-to) | 105-124 |
| Number of pages | 20 |
| Journal | Journal of Economics/ Zeitschrift fur Nationalokonomie |
| Volume | 94 |
| Issue number | 2 |
| Early online date | 8 Mar 2008 |
| Publication status | Published - Jul 2008 |
Abstract
Government-run entities are often more labor-intensive than private companies, even with identical production technologies. This need not imply slack in the public sector, but may reflect a wage tax advantage, stemming from the fact that government entities (partly) pay their taxes to themselves. A tax-induced cost advantage of public production precludes production efficiency and reduces welfare when labor supply is inelastic. With an elastic labor supply, a wage tax advantage of the public sector may improve welfare if it allows for a higher net wage.
Keywords
- Labor intensity, Public sector, Taxation
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- General Business,Management and Accounting
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of Economics/ Zeitschrift fur Nationalokonomie, Vol. 94, No. 2, 07.2008, p. 105-124.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Why is the public sector more labor-intensive?
T2 - A distortionary tax argument
AU - Poutvaara, Panu
AU - Wagener, Andreas
PY - 2008/7
Y1 - 2008/7
N2 - Government-run entities are often more labor-intensive than private companies, even with identical production technologies. This need not imply slack in the public sector, but may reflect a wage tax advantage, stemming from the fact that government entities (partly) pay their taxes to themselves. A tax-induced cost advantage of public production precludes production efficiency and reduces welfare when labor supply is inelastic. With an elastic labor supply, a wage tax advantage of the public sector may improve welfare if it allows for a higher net wage.
AB - Government-run entities are often more labor-intensive than private companies, even with identical production technologies. This need not imply slack in the public sector, but may reflect a wage tax advantage, stemming from the fact that government entities (partly) pay their taxes to themselves. A tax-induced cost advantage of public production precludes production efficiency and reduces welfare when labor supply is inelastic. With an elastic labor supply, a wage tax advantage of the public sector may improve welfare if it allows for a higher net wage.
KW - Labor intensity
KW - Public sector
KW - Taxation
UR - http://www.scopus.com/inward/record.url?scp=47249084298&partnerID=8YFLogxK
U2 - 10.1007/s00712-008-0002-6
DO - 10.1007/s00712-008-0002-6
M3 - Article
AN - SCOPUS:47249084298
VL - 94
SP - 105
EP - 124
JO - Journal of Economics/ Zeitschrift fur Nationalokonomie
JF - Journal of Economics/ Zeitschrift fur Nationalokonomie
SN - 0931-8658
IS - 2
ER -