Sector-Specific Unemployment and Corporate Income Tax Incidence: A Geometric Exposition

Leonard Wang ()

The American Economist, 1993, vol. 37, issue 1, 64-67

Abstract: This paper examines the incidence of the corporate income tax using duality theory for a two-sector general equilibrium model in which the economy experiences sector-specific unemployment and perfect capital mobility with a sector-specific rigid-wage in the corporate sector. Utilizing the simple geometry without the complicated mathematical manipulations required in the previous works, we demonstrate that capital always bears more of the corporate tax burden than does labor, while unemployment and national income unambiguously decline.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:37:y:1993:i:1:p:64-67

DOI: 10.1177/056943459303700108

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