Tax-Competition with Involuntary Unemployment

摘要: In the present paper we extend classical tax-competition framework of Zodrow and Mieszkowski (1986) by modelling involuntary unemployment allowing for labour taxation as a second source public funds. For large class production functions (including CES), it turns out that tax competition is characterized underprovision goods, positive taxes on both capital. We thus conclude results survive some important substantial modifications framework, are more general than recently suggested elsewhere.