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The Effects of Taxes on Labour in a Dynamic Efficiency Wage Model

The Effects of Taxes on Labour in a Dynamic Efficiency Wage Model Abstract This paper studies the impact of wage and employment taxes in an intertemporal efficiency wage model. Cases with fixed, linear and quadratic adjustment costs associated with job creation are considered. In general, the model shows that an increase in the employment tax leads to an increase in unemployment, reducing job creation, and has ambiguous effect on wages; whereas an increase in the wage tax reduces wages and has ambiguous impact on unemployment and job creation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

The Effects of Taxes on Labour in a Dynamic Efficiency Wage Model

The Japanese Economic Review , Volume 55 (3): 12 – Sep 1, 2004

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References (28)

Publisher
Springer Journals
Copyright
2004 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/j.1468-5876.2004.00278.x
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper studies the impact of wage and employment taxes in an intertemporal efficiency wage model. Cases with fixed, linear and quadratic adjustment costs associated with job creation are considered. In general, the model shows that an increase in the employment tax leads to an increase in unemployment, reducing job creation, and has ambiguous effect on wages; whereas an increase in the wage tax reduces wages and has ambiguous impact on unemployment and job creation.

Journal

The Japanese Economic ReviewSpringer Journals

Published: Sep 1, 2004

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

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