Taxation of labour, product varieties and skilled-unskilled wage inequality: short run versus long run
Sun, Sizhong, and Anwar, Sajid (2015) Taxation of labour, product varieties and skilled-unskilled wage inequality: short run versus long run. International Review of Economics & Finance, 38. pp. 250-257.
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Abstract
In a three-sector general equilibrium model, we examine the impact of a partial tax on labour on skilled unskilled wage inequality. We find that a tax on labour in industrial sector increases skilled unskilled wage inequality in the short run and can have the opposite effect in the long run. A tax on labour in the services sector reduces skilled unskilled wage inequality in both the short run and long run. Furthermore, the introduction of a tax on labour in agricultural sector has no effect on the skilled wage but reduces the unskilled wage. Accordingly, such a tax increases skilled unskilled wage inequality in both the short run and long run.
| Item ID: | 42024 |
|---|---|
| Item Type: | Article (Research - C1) |
| ISSN: | 1873-8036 |
| Keywords: | skilled-unskilled wage inequality; partial tax on labour; product varieties; monopolistic competition |
| Date Deposited: | 08 Dec 2015 18:37 |
| FoR Codes: | 14 ECONOMICS > 1402 Applied Economics > 140211 Labour Economics @ 40% 14 ECONOMICS > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation @ 60% |
| SEO Codes: | 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910208 Micro Labour Market Issues @ 100% |
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