The effects of tax policy and labor market institutions on income inequality

Translated title of the contribution: The effects of tax policy and labor market institutions on income inequality

Alka Obadić, Nika Šimurina, Robert Sonora

Research output: Contribution to journalReview articlepeer-review

Abstract

The purpose of this research is to investigate how labor market institutions and regulations and tax policies effect income inequality across the European member countries. The sample contains the fifteen core European Union (EU) members as well as thirteen Central and Eastern European (CEE) economies which have recently joined. Using fixed and random effect panel models over the sample period 2000-2011 we test the influence of three major tax forms (labor, capital and consumption), social security contributions, and labor market institutions. We demonstrate that the overall social contributions and labor taxes lead to statistically significant improvements in income inequality among EU member states. We conclude that tax policy, specifically the choice of taxes implemented, and labor market institutions, union membership in particular, reduce income inequality in the EU-28 in the observed period.

Translated title of the contributionThe effects of tax policy and labor market institutions on income inequality
Original languageEnglish
Pages (from-to)121-140
Number of pages20
JournalZbornik Radova Ekonomskog Fakultet au Rijeci
Volume32
Issue number1
StatePublished - Jun 2014

Keywords

  • Corruption
  • Education
  • Income inequality
  • Labor market institutions
  • Taxes

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