TY  - JOUR
AU  - Summers,Lawrence H.
AU  - Gruber,Jonathan
AU  - Vergara,Rodrigo
TI  - Taxation and the Structure of Labor Markets: The Case of Corporatism
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4063
PY  - 1992
Y2  - May 1992
UR  - http://www.nber.org/papers/w4063
L1  - http://www.nber.org/papers/w4063.pdf
N1  - Author contact info:
Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu

Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
AB  - We propose an explanation for the wide variation in rates of taxation across developed economies, based on differences in labor market institutions. In "corporatist" economies, which feature centralized labor markets, taxes on labor input will be less distortionary than when labor supply is determined individually. Since the level of labor supply is set by a small group of decision-makers, these individuals will recognize the linkage between the taxes that workers pay and the benefits that they receive. Labor tax burdens are indeed higher in more corporatist nations, and non-labor taxes are lower, which is consistent with this theory. There is also some evidence that the distortionary effects of labor taxes are lower in more corporatist economies.
ER  -