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Technological Choices and Labor Market Participation: Negative Income Tax


  • Samir Amine

    () (Université du Québec en Outaouais and CIRANO, Québec, Canada)

  • Pedro Lages Dos Santos

    () (EDEHN, Université du Havre, Le Havre, France)


In this article, we study the effect of the Negative Income Tax (NIT) on reducing inequalities. Using a matching model with a continuous distribution of worker skills, we show that a NIT reduces inequalities in favor of less qualified workers by making firms less selective and jobs less complex. However, this technological choice decreases the workers’ average productivity and therefore increases the unemployment rate.

Suggested Citation

  • Samir Amine & Pedro Lages Dos Santos, 2013. "Technological Choices and Labor Market Participation: Negative Income Tax," Eurasian Economic Review, Eurasia Business and Economics Society, vol. 3(2), pages 98-113, Fall.
  • Handle: RePEc:ebz:eerjrn:v:3:y:2013:i:2:p:98-113

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    Matching; Technological Choice; Negative Income Tax;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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