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A Tax‐Wage Bargain in Australia:Is a Free Lunch Possible?

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  • W. M. CORDEN
  • P. B. DIXON

Abstract

This paper examines the feasibility of a tax‐wage bargain in Australia designed to increase employment without generating excess product demand while government expenditure. investment and the balance of trade are held constant. It is assumed that tax cuts would lower pre‐tax real wages while keeping post‐tax real wages constant, and that the lower wage costs would increase potential output and employment along neoclassical lines. The question is whether product demand would expand more or less than potential supply. Estimates from the ORANI model of the IMPACT project are used to obtain a relationship between real wage costs and potential output.

Suggested Citation

  • W. M. Corden & P. B. Dixon, 1980. "A Tax‐Wage Bargain in Australia:Is a Free Lunch Possible?," The Economic Record, The Economic Society of Australia, vol. 56(154), pages 209-221, September.
    • Handle: RePEc:bla:ecorec:v:56:y:1980:i:154:p:209-221
    DOI: 10.1111/j.1475-4932.1980.tb01671.x
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    References listed on IDEAS

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    1. Dr D. S. Ironmonger, 1978. "Some Key Issues in the Macro Economic Debate in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 11(4), pages 19-23, December.
    2. P. Sheehan & B. Derody & P. Rosendale, 1979. "An Assessment of Recent Empirical Work Relevant to Macroeconomic Policy in Australian," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 12(1), pages 33-61, April.
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    Cited by:

    1. Stefan Boeters & Luc Savard, 2011. "The Labour Market in CGE Models," Cahiers de recherche 11-20, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    2. Michael Malakellis & Matthew Peter, 1991. "Stimulation of Employment in Neo-Classical Models," Centre of Policy Studies/IMPACT Centre Working Papers ip-49, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. W.M. Corden, 1989. "Australian Macroeconomic Policy Experience," The Economic Record, The Economic Society of Australia, vol. 65(2), pages 152-164, June.
    4. Vines, David, 2021. "A Productivity Commission: A Proposal for an Australian-style approach to creating a Policy-Reform Process for the UK," INET Oxford Working Papers 2021-13, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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