A) Marginal taxation and replacement ratio

t = 0

t = 0.15

t = 0.3

t = 0.4

ρ = 0

5.0

5.1

(0.0)

5.3

(0.0)

5.4

(0.0)

ρ = 0.15

5.7

(0.0)

6.0

(−0.1)

6.4

(−0.2)

7.0

(−0.3)

ρ = 0.3

6.6

(−0.2)

7.2

(−0.4)

8.5

(−1.0)

10.3

(−2.0)

ρ = 0.4

7.4

(−0.5)

8.6

(−1.0)

11.2

(−2.6)

17.3

(−7.3)

B) Hiring subsidies and firing costs (r = 0.2; t = 0.2)

F = 0

F = 0.33

F = 0.67

F = 1

H = 0

6.5

(−0.2)

6.0

(−0.3)

5.4

(−0.8)

4.7

(−1.6)

H = 0.33

7.0

(−0.3)

6.5

(−0.2)

6.0

(−0.3)

5.4

(−0.8)

H = 0.67

7.4

(−0.8)

7.0

(−0.3)

6.5

(−0.2)

6.0

(−0.3)

H = 1

7.8

(−1.6)

7.4

(−0.8)

7.0

(−0.3)

6.5

(−0.2)

C) Progressive taxation (ρ = 0.2; t = 0.2)

τ = 0

6.5

(−0.2)

τ = 0.33

4.8

(0.0)

τ = 0.67

3.8

(−0.4)

τ = 1

3.1

(−0.9)