Fiscal Policy Can Raise Both Employment and Productivity

William Scarth

International Productivity Monitor, 2005, vol. 11, 39-46

Abstract: According to the conventional wisdom, we face a trade-off between our equity and efficiency objectives. The author challenges this proposition. He shows in a rigorous manner that employment subsidies can indeed lead to lower unemployment and higher productivity growth in a standard economic model. This finding is particularly timely given the announcement by the Canadian government in the November 2005 Economic and Fiscal Update of a Working Income Tax Benefit. The author approvingly notes that this initiative suggests that the government may be starting to appreciate the pro-growth benefits of simultaneously addressing structural unemployment and inequality.

Keywords: Productivity; Productivity Growth; Equity; Efficicency; Fiscal Policy; Employment Subsidies; Unemployment; Employment; Working Income Tax Benefit; Economic and Fiscal Update; Canada; Inequality; Structural Unemployment (search for similar items in EconPapers)
JEL-codes: E24 H23 J38 J68 O47 O51 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (2)

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