Generating Jobs through State Employer Tax Credits: Is there a Better Way? (Revised)

Heidi Garrett-Peltier and Jeffrey Thompson

Working Papers from Political Economy Research Institute, University of Massachusetts at Amherst

Abstract: Revised April 13, 2010The Governors of Massachusetts, Connecticut, Rhode Island and several other states have recently proposed employer tax credits as measures to fight high unemployment in their states. Such policies are also being considered at the federal level. In the Working Paper, Jeff Thompson and Heidi Garrett-Peltier present evidence that such policies, in fact, do little to increase aggregate demand, and instead only modestly reduce the after-tax cost of labor in an economy with high unemployment, falling wages, and weak demand They suggest a more effective approach to creating jobs in the states: increasing spending in labor-intensive sectors and programs that are matched by federal funds, such as Medicaid. These expenditures would be particularly effective if they were financed through temporary high-income tax increases.

Keywords: State and Local Taxation; Subsidies; and Revenue; state and Local Budget and Expenditures; State and Local Government; Health; Education; and Welfare; Business Taxes and Subsidies; Labor Demand; Wages; Compensation; and Labor Costs (search for similar items in EconPapers)
JEL-codes: H25 H71 H72 H75 J23 J38 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://per.umass.edu/fileadmin/pdf/working_papers ... 50/WP219_revised.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to per.umass.edu:443 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uma:periwp:wp219_revised

Access Statistics for this paper

More papers in Working Papers from Political Economy Research Institute, University of Massachusetts at Amherst Contact information at EDIRC.
Bibliographic data for series maintained by Judy Fogg ( this e-mail address is bad, please contact ).