Benefit Levels, Tax Progression and Employment
This paper shows that increases in direct tax progression tend to reduce wages and increase welfare and employment, even in a model allowing for labour supply effects. The employment effect is reversed when benefit levels are low, however. The model shows the different impacts on full- and part-time workers, and on men and women. An a.g.e. model for the UK is also simulated, with an efficiency wage sector with training costs generating unemployment effects.
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Volume (Year): 58 (2001)
Issue (Month): 2 (February)
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