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Title: Monopsony Amplifies Distortions from Progressive Taxes
Progressive income taxes distort hiring and wages when firms have labor market power. We characterize this novel monopsony cost of progressivity in a simple monopsony economy and derive efficiency wedges that depend on progressivity. A simple quantification of these wedges points to the possibility that the monopsony cost may be of similar magnitudes to redistribution and insurance benefits.  more » « less
Award ID(s):
2214460
PAR ID:
10527514
Author(s) / Creator(s):
; ; ;
Publisher / Repository:
American Economic Review
Date Published:
Journal Name:
AEA Papers and Proceedings
Volume:
114
ISSN:
2574-0768
Page Range / eLocation ID:
555 to 560
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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