IMPERFECT LABOR MOBILITY AND CORPORATE TAX INCIDENCE

We introduce imperfect labor mobility into the corporate tax incidence analysis and demonstrate that for smaller values of the elasticity of labor mobility parameter the corporate income tax could reduce the relative income of corporate labor even when the taxed sector was capital intensive. Specifi...

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Bibliographic Details
Published in:International economic journal 1992-10, Vol.6 (3), p.75-82
Main Authors: PARAI, AMAR K., CHOUDHARY, MUNIR A. S.
Format: Article
Language:English
Subjects:
Corporate taxation
Labour mobility
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Summary:We introduce imperfect labor mobility into the corporate tax incidence analysis and demonstrate that for smaller values of the elasticity of labor mobility parameter the corporate income tax could reduce the relative income of corporate labor even when the taxed sector was capital intensive. Specifically, we identify a range of values of the elasticity of labor mobility parameter for which the well-known Harberger result could be overturned. Reprinted by permission of Taylor and Francis Ltd.
ISSN:1016-8737
DOI:10.1080/10168739200080020