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Scientific article 2000
  • Labour Market
  • Labour Market

Progressive Taxation and Wage Setting: Some Evidence for Denmark

Authors:

  • Ben Lockwood
  • Torsten Sløk
  • Torben Tranaes
  • Labour Market
  • Labour Market
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The proposition that a progressive tax system contributes to wage moderation is studied using Danish earnings data disaggregated by occupation, gender and earnings level. Our main conclusions are that income-tax progression affects wage setting, but whether it moderates or exaggerates wage pressure is income dependent. An increase in progressivity reduces the pre-tax earnings of middle-income workers (manual male workers and moderate income earners among both male and female non-manual workers). The reverse is found for high-income earners (non-manual male workers), in that an increase in progressivity tends to raise pre-tax earnings. Finally, there is no significant effect of tax progressivity on the wages of low-income earners.

Authors

  • Ben LockwoodTorsten SløkTorben Tranaes

About this publication

  • Published in

    The Scandinavian Journal of Economics
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