Sartor N., Malcomson J.M. (1987).

Tax-Push Inflation in a Unionized Labour Market. European Economic Review, vol. 31, pp. 1581-1596.


In this paper the effect of changes in the average rate and in the progressivity of direct taxes on (a) the level of wages and (b) the extent to which cost-of-living increases are transmitted to wages are considered for a unionized labour market. These effects are derived theoretically for different union objectives and the models applied to data for Italian industry in a form which allows discrimination between these different objectives. The empirical estimates for the preferred model are then used to determine the effects of the postulated tax changes.