Imperfect factor mobility, unemployment, and the short-period incidence of a capital income tax José M. González-Páramo
By: González Páramo Martínez Murillo, José Manuel
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Item type | Current location | Home library | Call number | Status | Date due | Barcode |
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IEF | HPE/2005/172-2 (Browse shelf) | Available | HPE/2005/172-2 |
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A crucial feature of the short-run perspective in many policy-relevant issues is the existence of unemployment due to wage rigidities. At the sametime, imperfections in the degree of factor mobility between sectors or regionsdetermine the nature and flexibility of the responses of the economy to exogenous shocks. It is no wonder then that the incidence of taxation upon employment and income distribution is a central preoccupation of the fiscal authorities. In this paper we explore the structure of the incidence and the economic effects ofa selective capital income tax in a neoclassical, two-sector, two-factor, short-period model in which the existence of a sticky wage that exceeds the maximun level consistent with full-employment leads to unemployment of labour.
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