This paper examines the transitional losses that may follow conversion from an income tax to a consumption tax, even when conversion eventually raises steady-state lifetime welfare. Two recent studies have left the impression that the transitional losses would be large. Using a life-cycle growth model, this paper examines two reasons why these studies have probably overestimated the transitional losses. The model computes the welfare gains and losses of each age cohort along the transition path. It is shown that the greater the bequest motive and subjective discount rate generating the particular initial income tax steady state, the smaller would be the transitional losses. Similarly, a policy of age phasing would reduce the losses. The results demonstrate the importance of examining the transition path whenever a policy change alters capital accumulation.

This paper examines the effect of unionization on the profitability of firms. Abnormal monthly common stock returns for a sample of 253 NYSE-listed firms are estimated for the month in which the union petitions for an election and for the month in which the National Labor Relations Board certifies the election outcome. The results suggest that unionization, on average, is associated with a reduction in equity value. When unions win an election, the average loss associated with the unionization drive is 3.8 percent of equity value. When unions lose an election, there is an average net reduction of 1.3 percent in the equity value of the firm.

This paper examines the effect of unionization on the profitability of firms. Abnormal monthly common stock returns for a sample of 253 NYSE-listed firms are estimated for the month in which the union petitions for an election and for the month in which the National Labor Relations Board certifies the election outcome. The results suggest that unionization, on average, is associated with a reduction in equity value. When unions win an election, the average loss associated with the unionization drive is 3.8 percent of equity value. When unions lose an election, there is an average net reduction of 1.3 percent in the equity value of the firm.

This paper examines the transitional losses that may follow conversion from an income tax to a consumption tax, even when conversion eventually raises steady-state lifetime welfare. Two recent studies have left the impression that the transitional losses would be large. Using a life-cycle growth model, this paper examines two reasons why these studies have probably overestimated the transitional losses. The model computes the welfare gains and losses of each age cohort along the transition path. It is shown that the greater the bequest motive and subjective discount rate generating the particular initial income tax steady state, the smaller would be the transitional losses. Similarly, a policy of age phasing would reduce the losses. The results demonstrate the importance of examining the transition path whenever a policy change alters capital accumulation.