A tax-based incomes policy that removes sectoral labour market imbalances

Ian P. Hare
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Ian P. Hare: St. John's, Canada

Abstract: A modified version of a tax-based incomes policy (TIP) incentive tax is proposed that retains the aggregate wage-restraining effect of the tax proposed by Jackman and Layard, but in addition should help to speed the elimination of unemployment that results from the slow response of relative wages to sectoral labour surpluses or shortages. This effect is illustrated using a two-sector model with downwardly inflexible nominal wages.

Keywords: Incomes policy; unemployment (search for similar items in EconPapers)
JEL-codes: E64 J68 (search for similar items in EconPapers)
Date: Written 2003-11-12
Note: Type of Document - ASCII text; pages: 16

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