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Should the marginal tax rate be negative? Ragnar Frisch on the socially optimal amount of work

Author

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  • Sandmo, Agnar

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

In the late 1940s, Ragnar Frisch published two articles in Norwegian that constitute a pioneering attempt to apply welfare economics to a problem of economic policy. The main contention of the articles is that there exists a fundamental externality in the labour market because the marginal productivity of labour depends both on input in the individual unit and on total labour use in the economy. While inspired by the problems of postwar reconstruction, Frisch came to regard it as a general problem in a decentralized economy, and he explores its consequences for wage and tax policy. While Frisch attached great importance to the analysis, it has received little attention in the subsequent literature.

Suggested Citation

  • Sandmo, Agnar, 2017. "Should the marginal tax rate be negative? Ragnar Frisch on the socially optimal amount of work," Discussion Paper Series in Economics 1/2017, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2017_001
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    Cited by:

    1. Steen, Frode & Nguyen-Ones, Mai, 2018. "Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon?," CEPR Discussion Papers 12879, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Economic policy; wage; tax policy;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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