Fiscal Policy and Labor Supply
In this paper, the effects of fiscal policy on labor supply are considered in a life-cycle model. Three alternative policies are examined: balanced-budget changes in public spending, debt-financed changes in public spending, and substitution between debt and taxes. It is shown that the effects of such policies on individual incentives to work depend crucially on the characteristics of public-spending changes associated with tax-rate changes and on how the future tax burden implied by a budget deficit is perceived by the household.
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Volume (Year): 43 (1988)
Issue (Month): 3 ()
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