TAX INCIDENCE IN A MODEL WITH EFFICIENCY WAGES AND UNEMPLOYMENT

The purpose of the present paper is to examine the effects of taxation on income distribution in a model with efficiency wages and involuntary unemployment. Central to the efficiency-wage theory is the hypothesis that firms may set wages above market-clearing levels, whenever the productivity of labor depends positively on the real wage paid by the firm. Within a two sector general equilibrium model we study the incidence of factor and commodity taxes on income distribution. Our findings are quite different from the results derived by the traditional neoclassical analysis, originally developed by Harberger.tax incidence, efficiency wages

MINIMUM WAGE AND INCOME DISTRIBUTION IN THE HARRIS-TODARO MODEL

The purpose of this paper is to examine the effects of a change in the minimum wage on income distribution and employment in a developing economy. The basic framework of our analysis is the original Harris-Todaro model, in which the only factor that is intersectorally mobile is labor. We analyze the effects of a change in the minimum wage on income distribution, sectoral employment and unemployment, both in the framework of a small open economy, and with endogenous commodity-price changes. Our findings differ from the results of the existing literature and shed light on the complex interaction between the urban and the rural sector of a developing economy.Minimum Wage, Economies of Scale, Urban Unemployment

MINIMUM WAGE AND INCOME DISTRIBUTION IN DEVELOPING COUNTRIES

The purpose of this paper is to examine the effects of a change in the minimum wage on income distribution and employment in a developing economy. The basic framework of our analysis is the original Harris- Todaro model, in which the only factor that is intersectorally mobile is labor. We analyze the effects of a change in the minimum wage on income distribution, sectoral employment and unemployment, both in the framework of a small open economy, and with endogenous commodity-price changes. Our findings differ from the results of the existing literature and shed light on the complex interaction between the urban and the rural sector of a developing economy.minimum wage, economies of scale, urban unemployment

The Greek fiscal crisis and the role of fiscal governance

In view of the growing attention paid to the role of fiscal governance in budgetary outcomes, this paper tries to shed light on the link between the recent Greek fiscal crisis and aspects of fiscal governance. It reviews fiscal developments in Greece over the last decade and challenges the widely held view that optimistic macroeconomic forecasts adopted by the Greek government, as well as three international organisations, were responsible for unrealistic fiscal deficit forecasts. Instead, the weak domestic institutional budget framework and the ineffectiveness of international organizations to act as signaling mechanisms emerge as the main reasons for weak fiscal performance. In this light, the paper puts forward some ideas for improving the domestic institutional framework for conducting fiscal policy in Greece

A Note on Externalities and Taxation.

The purpose of this paper is to explore the distributional aspects of a tax that is imposed in order to correct the detrimental effects of a production externality. In the general framework of a two-sector general equilibrium model, the author shows that A. B. Harberger's classic results of tax incidence may change considerably because of the presence of the externality. The author also shows that the tax is effective in reducing the detrimental effect of the externality, although the return of the taxed.factor may rise relative to the return of the untaxed factors.