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Three Theorems on Inflation Taxes and Marginal Employment Subsidies

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  • Andrew Oswald

Abstract

The paper studies the micro-economics of inflation taxes and marginal employment subsidies. It proves under very weak assumptions (i) an inflation tax will reduce the long-run equilibrium wage or price and (ii) that a marginal employment subsidy will raise the long-run equilibrium employment level. The theorems are illustrated with examples. The paper also proves (iii) that in special circumstances a tax on inflation is exactly equilivalent to a marginal employment subsidy.

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File URL: http://arks.princeton.edu/ark:/88435/dsp01pz50gw09f
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Bibliographic Info

Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 547.

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Date of creation: Sep 1983
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Handle: RePEc:pri:indrel:dsp01pz50gw09f

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Cited by:
  1. Andreas Knabe & Ronnie Schöb, 2007. "Subsidizing Extra Jobs: Promoting Employment by Taming the Unions," CESifo Working Paper Series 2130, CESifo Group Munich.
  2. Andreas Knabe & Ronnie Schöb & Joachim Weimann, 2006. "Marginal Employment Subsidization: A New Concept and a Reappraisal," CESifo Working Paper Series 1707, CESifo Group Munich.
  3. Schöb, Ronnie, 2007. "Soziale Grundsicherung und Beschäftigung," Discussion Papers 2007/12, Free University Berlin, School of Business & Economics.
  4. Mary C. Daly & Daniel J. Wilson, 2006. "Keeping up with the Joneses and staying ahead of the Smiths: evidence from suicide data," Working Paper Series 2006-12, Federal Reserve Bank of San Francisco.
  5. Bijie Ren, 2008. "The regional effects of marginal wage subsidies," Psychometrika, Springer, vol. 3(4), pages 598-626, December.

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