IDEAS home Printed from https://ideas.repec.org/p/crs/wpaper/2006-08.html
   My bibliography  Save this paper

Should Low Skilled Work be Subsidized ?

Author

Listed:
  • Philippe Choné

    (Crest)

  • Guy Laroque

    (Crest)

Abstract

A number of countries have recently implemented variants of a negative incometax, to push the less skilled members of the economy into work, or to make workpay in comparison with welfare benefits. In most cases, these measures haveresulted for the concerned groups in a decrease of the tax rates, that remainpositive, rather than in a subsidy, in conformity with the recommendations ofthe current theory of optimal taxation. Indeed in the Mirrlees setup (continuouslabor supply or intensive margin, unobserved productivity, utilitarian planner)the marginal tax rate is non negative at the optimum.The purpose of the paper is to question this result of the theory. We studyeconomies where it is optimal to have people in the economy work more than inthe laissez-faire. We provide an example in the intensive setup. The utilitarianoptima in the extensive model seem to exhibit this property quite generally. Wehope that these results help towards providing some theoretical foundations forlow skilled work subsidy, and extending the scope of welfare to work programs.

Suggested Citation

  • Philippe Choné & Guy Laroque, 2006. "Should Low Skilled Work be Subsidized ?," Working Papers 2006-08, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2006-08
    as

    Download full text from publisher

    File URL: http://crest.science/RePEc/wpstorage/2006-08.pdf
    File Function: Crest working paper version
    Download Restriction: no

    References listed on IDEAS

    as
    1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-1137, December.
    2. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, vol. 95(4), pages 1214-1236, September.
    3. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
    4. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    5. repec:adr:anecst:y:1998:i:49-50 is not listed on IDEAS
    6. Arora, Ashish & Ceccagnoli, Marco & Cohen, Wesley M., 2008. "R&D and the patent premium," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1153-1179, September.
    7. repec:adr:anecst:y:1998:i:49-50:p:19 is not listed on IDEAS
    8. Monjon, Stephanie & Waelbroeck, Patrick, 2003. "Assessing spillovers from universities to firms: evidence from French firm-level data," International Journal of Industrial Organization, Elsevier, vol. 21(9), pages 1255-1270, November.
    9. F. M. Scherer, 1998. "The Size Distribution of Profits from Innovation," Annals of Economics and Statistics, GENES, issue 49-50, pages 495-516.
    10. Emmanuel Duguet & Isabelle Kabla, 1998. "Appropriation Strategy and the Motivations to Use the Patent System: An Econometric Analysis at the Firm Level in French Manufacturing," Annals of Economics and Statistics, GENES, issue 49-50, pages 289-327.
    11. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    12. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-784, July.
    13. Jorde, Thomas M & Teece, David J, 1990. "Innovation and Cooperation: Implications for Competition and Antitrust," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 75-96, Summer.
    14. repec:adr:anecst:y:1998:i:49-50:p:11 is not listed on IDEAS
    15. repec:dau:papers:123456789/13785 is not listed on IDEAS
    16. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, pages 611-635.
    17. Mariko Sakakibara & Lee Branstetter, 1999. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," NBER Working Papers 7066, National Bureau of Economic Research, Inc.
    18. repec:adr:anecst:y:1991:i:20-21:p:04 is not listed on IDEAS
    19. Hall, Bronwyn H & Ziedonis, Rosemarie Ham, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995," RAND Journal of Economics, The RAND Corporation, pages 101-128.
    20. Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134.
    21. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
    22. Walter G. Park & Juan Carlos Ginarte, 1997. "Intellectual Property Rights And Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 51-61, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hellwig, Martin F., 2007. "A contribution to the theory of optimal utilitarian income taxation," Journal of Public Economics, Elsevier, pages 1449-1477.
    2. Pierre Cahuc & Guy Laroque, 2014. "Optimal Taxation and Monopsonistic Labor Market: Does Monopsony Justify the Minimum Wage?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 259-273, April.
    3. Lee, David & Saez, Emmanuel, 2012. "Optimal minimum wage policy in competitive labor markets," Journal of Public Economics, Elsevier, pages 739-749.
    4. Hellwig, Martin F., 2007. "A contribution to the theory of optimal utilitarian income taxation," Journal of Public Economics, Elsevier, pages 1449-1477.
    5. Beaudry, Paul & Blackorby, Charles & Szalay, Dezso, 2006. "Taxes and Employment Subsidies in Optimal Redistribution Programs (Revised Version)," The Warwick Economics Research Paper Series (TWERPS) 779, University of Warwick, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2006-08. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sri Srikandan). General contact details of provider: http://edirc.repec.org/data/crestfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.