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Taxes, transfers and employment in an incomplete markets model

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  • Alonso-Ortiz, Jorge
  • Rogerson, Richard

Abstract

The consequences of increases in the scale of tax and transfer programs are assessed in the context of a model with idiosyncratic productivity shocks and incomplete markets. The effects are contrasted with those obtained in a stand-in household model featuring no idiosyncratic shocks and complete markets. The main finding is that the impact on hours remains very large, but the welfare consequences are very different. The analysis also suggests that tax and transfer policies have large effects on average labor productivity via selection effects on employment.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 57 (2010)
Issue (Month): 8 (November)
Pages: 949-958

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Handle: RePEc:eee:moneco:v:57:y:2010:i:8:p:949-958

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Web page: http://www.elsevier.com/locate/inca/505566

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Cited by:
  1. Senbeta, Sisay, 2011. "How applicable are the new keynesian DSGE models to a typical low-income economy?," MPRA Paper 30931, University Library of Munich, Germany.
  2. Oh, Hyunseung & Reis, Ricardo, 2012. "Targeted transfers and the fiscal response to the great recession," Journal of Monetary Economics, Elsevier, Elsevier, vol. 59(S), pages S50-S64.
  3. Fève, P. & Matheron, J. & Sahuc,J-G., 2013. "The Laffer Curve in an Incomplete-Market Economy," Working papers, Banque de France 438, Banque de France.
  4. Alonso-Ortiz, Jorge, 2013. "Taxes, Transfers and the Macroeconomy," MPRA Paper 49569, University Library of Munich, Germany.
  5. Eduardo Zilberman & Anna Dos Reis, 2013. "On the Optimal Size of Public Employment," 2013 Meeting Papers, Society for Economic Dynamics 482, Society for Economic Dynamics.
  6. Michael Keane & Richard Rogers, 2012. "Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective," Economics Series Working Papers 2012-W12, University of Oxford, Department of Economics.
  7. Giovanni Di Bartolomeo & Patrizio Tirelli & Nicola Acocella, 2013. "The comeback of inflation as an optimal public finance tool," Working Papers, University of Milano-Bicocca, Department of Economics 263, University of Milano-Bicocca, Department of Economics, revised Dec 2013.
  8. McKay, Alisdair & Reis, Ricardo, 2013. "The role of automatic stabilizers in the U.S. business cycle," CEPR Discussion Papers 9454, C.E.P.R. Discussion Papers.
  9. Eduardo Zilberman & Tiago Berriel, 2012. "Targeting the Poor: A Macroeconomic Analysis of Cash Transfer Programs," Textos para discussão 598, Department of Economics PUC-Rio (Brazil).
  10. Artheya, Kartik & Owens, Andrew & Schwartzman, Felipe, 2014. "Does Redistribution Increase Output? The Centrality of Labor Supply," Working Paper, Federal Reserve Bank of Richmond 14-4, Federal Reserve Bank of Richmond.

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