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Infrastructure Development Versus Direct Cash Transfer: A General Equilibrium Comparison

Author

Listed:
  • Marjit Sugata

    (Centre for Studies in Social Sciences, Calcutta, India)

  • Mandal Biswajit

    () (Department of Economics & Politics, Visva-Bharati University, Santiniketan, West Bengal, India, 731235)

  • Chatterjee Tonmoy

    (Ananda Chandra College, Jalpaiguri, India)

Abstract

This paper attempts to provide an explanation to the debate whether infrastructure development is more effective than direct cash transfer to reduce wage disparity between skilled and unskilled workers. We use a simple general equilibrium structure to argue that in presence of symmetric productivity effects direct cash transfer meets the target when such transfer is financed by tax revenue collected from skilled wage bill. Nevertheless, in case of asymmetric productivity effects the arguments boil down to how different sectors absorb infrastructural facility to improve their productivity.

Suggested Citation

  • Marjit Sugata & Mandal Biswajit & Chatterjee Tonmoy, 2017. "Infrastructure Development Versus Direct Cash Transfer: A General Equilibrium Comparison," Review of Economics, De Gruyter, vol. 68(1), pages 63-74, April.
  • Handle: RePEc:lus:reveco:v:68:y:2017:i:1:p:63-74:n:3
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    More about this item

    Keywords

    infrastructure; redistribution; personal income tax; general equilibrium;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F1 - International Economics - - Trade

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