Taxation of labour, product varieties and skilled-unskilled wage inequality: short run versus long run
Journal Publication ResearchOnline@JCUAbstract
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.
Journal
International Review of Economics & Finance
Publication Name
International Review of Economics & Finance
Volume
38
ISBN/ISSN
1873-8036
Edition
N/A
Issue
N/A
Pages Count
8
Location
N/A
Publisher
Elsevier
Publisher Url
N/A
Publisher Location
N/A
Publish Date
N/A
Url
N/A
Date
N/A
EISSN
N/A
DOI
10.1016/j.iref.2015.03.001