IDEAS home Printed from https://ideas.repec.org/a/bla/ausecr/v34y2001i1p64-80.html
   My bibliography  Save this article

A Wage–Tax Policy to Increase Employment

Author

Listed:
  • Peter B. Dixon
  • Maureen T. Rimmer

Abstract

We use MONASH, a dynamic general equilibrium model, in an analysis of the macroeconomic effects of combining a freeze on Award wage rates in Australia with the granting of tax credits to low‐wage workers in low‐income families. Our results suggest that if this policy were successful in lowering the actual real before‐tax wage rates of workers in the Award system, then it would have favourable short‐run effects on aggregate employment. These effects would persist into the long run if the policy led to rightward shifts in labour supply curves. The downside risk of the policy is that it would be counteracted by over‐Award payments, leaving a budgetary problem with no compensating employment gain. At the same time, the Award system would be rendered irrelevant to the determination of wage rates, possibly increasing the costs of wage bargaining.

Suggested Citation

  • Peter B. Dixon & Maureen T. Rimmer, 2001. "A Wage–Tax Policy to Increase Employment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(1), pages 64-80, March.
    • Handle: RePEc:bla:ausecr:v:34:y:2001:i:1:p:64-80
    DOI: 10.1111/1467-8462.00177
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8462.00177
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8462.00177?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jeff Borland, 2002. "Comments on ‘The Five Economists’ Plan: the original idea and further developments’," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 5(2), pages 239-242, June.
    2. Bell, William Paul, 2005. "An evaluation of policies to reduce fiscal pressure induced by population ageing in Australia," MPRA Paper 38286, University Library of Munich, Germany.
    3. Peter Dawkins, 2002. "The 'Five Economists' Plan: The Original Idea and Further Developments," CEPR Discussion Papers 450, Centre for Economic Policy Research, Research School of Economics, Australian National University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausecr:v:34:y:2001:i:1:p:64-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/mimelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.