Technological Choices and Labor Market Participation: Negative Income Tax

Samir Amine and Pedro Santos ()

Eurasian Economic Review, 2013, vol. 3, issue 2, 98-113

Abstract: In this article, we study the effect of the Negative Income Tax (NIT) on reducing inequalities. Using a matching model with a continuous distribution of worker skills, we show that a NIT reduces inequalities in favor of less qualified workers by making firms less selective and jobs less complex. However, this technological choice decreases the workers’ average productivity and therefore increases the unemployment rate. Copyright Eurasia Business and Economics Society 2013

Keywords: Matching; Technological Choice; Negative Income Tax; D63; H21; J41; J64 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.14208/eer.2013.03.02.001

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