Taxation of labour, product varieties and skilled-unskilled wage inequality: Short-run versus long-run

Sizhong Sun; Sajid Anwar

doi:10.1016/j.iref.2015.03.001

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Taxation of labour, product varieties and skilled-unskilled wage inequality: Short-run versus long-run

Journal article

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Peer reviewed

Taxation of labour, product varieties and skilled-unskilled wage inequality: Short-run versus long-run

Sizhong Sun and Sajid Anwar

International Review of Economics and Finance, Vol.38, pp.250-257

2015

DOI: https://doi.org/10.1016/j.iref.2015.03.001

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Abstract

skilled-unskilled wage inequality

partial tax on labour

product varieties

monopolistic competition

short-run

long-run

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, 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.

Details

Title: Taxation of labour, product varieties and skilled-unskilled wage inequality: Short-run versus long-run
Authors: Sizhong Sun (Author) - James Cook University
Sajid Anwar (Author) - University of the Sunshine Coast - Faculty of Arts and Business
Publication details: International Review of Economics and Finance, Vol.38, pp.250-257
Publisher: Elsevier BV
Date published: 2015
DOI: 10.1016/j.iref.2015.03.001
ISSN: 1059-0560
Organisation Unit: School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland; USC Business School - Legacy
Language: English
Record Identifier: 99449583302621
Output Type: Journal article

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