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Kessing, Sebastian G.; Konrad, Kai A. (2005): Union strategy and optimal income taxation. WZB Discussion Paper, SP II 2005-04
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Restrictions on work hours are more important in countries with a large welfare state. We show that this empirical observation is consistent with the strategic effects of such restrictions in a welfare state in the context of optimal direct taxation in the tradition of Mirrlees (1971). Our results also apply to nonwelfarist states which have income redistribution, but not in purely extortionary states.