Tax Incidence In A Model With Efficiency Wages And Unemployment
The purpose of the present paper is to examine the effects of taxation on income distribution in a model with efficiency wages and involuntary unemployment. Central to the efficiency-wage theory is the hypothesis that firms may set wages above market-clearing levels, whenever the productivity of labor depends positively on the real wage paid by the firm. Within a two sector general equilibrium model we study the incidence of factor and commodity taxes on income distribution. Our findings are quite different from the results derived by the traditional neoclassical analysis, originally developed by Harberger.
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- Levine, David, 1987. "Efficiency wages in Weitzman's share economy," Economics Letters, Elsevier, vol. 23(3), pages 245-249.
- Don Fullerton & Gilbert E. Metcalf, 2001.
Discussion Papers Series, Department of Economics, Tufts University
0106, Department of Economics, Tufts University.
- Don Fullerton & Gilbert E. Metcalf, 2002. "Tax Incidence," NBER Working Papers 8829, National Bureau of Economic Research, Inc.
- Gilbert E. Metcalf, 2006. "Tax Incidence," Discussion Papers Series, Department of Economics, Tufts University 0607, Department of Economics, Tufts University.
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