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Three Theorems on Inflation Taxes and Marginal Employment Subsidies

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  • Oswald, Andrew

    (Department of Economics, University of Warwick)

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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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 220.

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Length: 22 pages
Date of creation: 1982
Date of revision:
Handle: RePEc:wrk:warwec:220

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Cited by:
  1. Andreas Knabe & Ronnie Schöb, 2013. "Subsidizing extra jobs: promoting employment by taming the unions," Oxford Economic Papers, Oxford University Press, vol. 65(4), pages 807-831, October.
  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. 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.
  4. Bijie Ren, 2008. "The regional effects of marginal wage subsidies," Psychometrika, Springer, vol. 3(4), pages 598-626, December.
  5. Schöb, Ronnie, 2007. "Soziale Grundsicherung und Beschäftigung," Discussion Papers 2007/12, Free University Berlin, School of Business & Economics.

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