Fiscal Policy Can Raise Both Employment and Productivity
AbstractAccording to the conventional wisdom, we face a trade-off between our equity and efficiency objectives. The author challenges this proposition. He shows in a rigorous manner that employment subsidies can indeed lead to lower unemployment and higher productivity growth in a standard economic model. This finding is particularly timely given the announcement by the Canadian government in the November 2005 Economic and Fiscal Update of a Working Income Tax Benefit. The author approvingly notes that this initiative suggests that the government may be starting to appreciate the pro-growth benefits of simultaneously addressing structural unemployment and inequality.
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Bibliographic InfoArticle provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.
Volume (Year): 11 (2005)
Issue (Month): (Fall)
Find related papers by JEL classification:
- O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michelle Alexopoulos, 2003. "Growth and unemployment in a shirking efficiency wage model," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 728-746, August.
- N. Gregory Mankiw, 2000.
"The Savers-Spenders Theory of Fiscal Policy,"
NBER Working Papers
7571, National Bureau of Economic Research, Inc.
- N. Gregory Mankiw, 1999. "The Savers-Spenders Theory of Fiscal Policy," Harvard Institute of Economic Research Working Papers 1888, Harvard - Institute of Economic Research.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Osberg, L., 1995. "The Equity/Efficiency Trade-Off in Retrospect," Department of Economics at Dalhousie University working papers archive 95-04, Dalhousie, Department of Economics.
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