Three Theorems on Inflation Taxes and Marginal Employment Subsidies

The paper studies the micro-economics of inflation taxes and marginal employment subsidies. It proves that under very weak assumptions (i) an inflation tax will reduce the long-run equilibrium wage or price and (ii) that a marginal employment subsidy will raise the longrun equilibrium employment level. The theorems are illustrated with examples. The paper also prove's (iii) that in special circumstances a tax on inflation is exactly equivalent to a marginal employment subsidy.


Issue Date:
Nov 11 1982
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/269163
Language:
English
Total Pages:
26




 Record created 2018-03-02, last modified 2018-03-04

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