Does the Wage Tax System Cause Budget Deficits? A Macro-economic Experiment
AbstractIn this paper we investigate experimentally the economic functioning of a wage tax system for financing unemployment benefits in an international economy, in particular in reaction to budget deficits and tax adjustment. Our results support the hypothesis that due to out-of-equilibrium price uncertainty producers are reluctant to employ inputs. We also observe a downward pressure on wages exacerbated by an over-supply of labor by consumers. These observations can explain the budget deficits found. Furthermore, we find that tax adjustments in order to facilitate a balancing of the budget has strong adverse effects on unemployment and real GDP. Copyright 2001 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 109 (2001)
Issue (Month): 3-4 (December)
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Web page: http://www.springerlink.com/link.asp?id=100332
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- Steven Tucker & Charles Noussair & Fortuna Casoria & Arno Riedl, 2013.
"Experimental Labor Markets And Policy Considerations: Incomplete Contracts And Macroeconomic Aspects,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 27(3), pages 398-420, 07.
- Casoria Fortuna & Riedl Arno, 2012. "Experimental labor markets and policy considerations: Incomplete contracts and macroeconomic aspects," Research Memorandum 058, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Casoria, Fortuna & Riedl, Arno, 2012. "Experimental Labor Markets and Policy Considerations: Incomplete Contracts and Macroeconomic Aspects," IZA Discussion Papers 7102, Institute for the Study of Labor (IZA).
- John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Papers 334, University of Pittsburgh, Department of Economics, revised Jun 2014.
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