The Income Effects of Public Subsidies to Traded Services

Donald P. Hirasuna and Glen C. Pulver
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Donald P. Hirasuna: Research Department, Minnesota House of Representatives
Glen C. Pulver: University of Wisconsin-Madison

The Review of Regional Studies, 1998, vol. 28, issue 3, 43-64

Abstract: Examining the effects of four economic development subsidies- factor tax deductions on capital and labor and subsidies for research and development and labor training- we find that subsidies to the traded services producing sector can raise aggregate real income and lower income inequality in comparison to the same subsidies to the manufacturing sectors. The analysis is conducted with a computable general equilibrium model of a state economy. The model is a specific factor model with 21 different industries and 18 different occupations.

Date: 1998
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