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The regional effects of marginal wage subsidies

Author

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  • REN Bijie

    (School of Economics, Nankai University, Tianjin 300071, China)

Abstract

The main research of this paper is the regional effects of marginal wage subsidies. Some regional economic issues are discussed such as production scales, operating profits, industry distribution, and expenditure distribution across the rich and poor regions. It is proven that, marginal wage subsidies improve the employment and raise the industrial share of the poor region, but meanwhile the expenditure share in the rich region increases for marginal wage subsidies. It is also showed that, the relationship between the effectiveness of marginal wage subsidies and the level of openness to trade is ambiguous when the wage level is very high, however, if the wage level is low enough thus marginal wage subsidies can cause relatively large employment increase, marginal wage subsidies cooperating with freer trade policy would be more effective.

Suggested Citation

  • REN Bijie, 2008. "The regional effects of marginal wage subsidies," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 3(4), pages 598-626, December.
    • Handle: RePEc:fec:journl:v:3:y:2008:i:4:p:598-626
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-008-0030-8
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    More about this item

    Keywords

    employment increase; marginal wage subsidies (MWS); regional inequality;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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