Targeted jobs tax credit-tax credit have affected wages

Assignment Help Business Economics

Reference no: EM131096473

a) The Targeted Jobs Tax Credit (TJTC) – enacted in 1978 and expired in 1994 – offered employers a tax credit for each less-skilled worker they employed. Assume that the tax credit was fixed at $5 per-hourworked by a less-skilled worker. According to neoclassical theory, how should this tax credit have affected wages and employment of less-skilled workers? Explain and show graphically.

b) Suppose that instead of offering a tax credit to employers to hire less-skilled workers, the government decides to increase employer payroll taxes to finance an expansion of unemployment insurance. i) Use graphs to explain how the incidence of the payroll tax – i.e., the share of the tax borne by workers versus employers. ii) Explain and show graphically how employment levels depend on the elasticity of the labor supply curve.

Reference no: EM131096473

Questions Cloud

Adjust your purchase of peanut butter : You are the manager of a supermarket, and you know that the income elasticity of peanut butter is exactly −0.5. Due to the economic recession, you expect incomes to increase by 10 percent next year. How should you adjust your purchase of peanut butte..

Saw increasing wages and increasing worker productivity : In the late 1990s, the U.S. economy consistently saw increasing wages and increasing worker productivity. If wages rise, how does aggregate supply change? If productivity rises, how does aggregate supply change?

Taxes to affect real output and the price level : Governments sometimes try to change government spending or taxes to affect real output and the price level. If the government wants to use either government spending or taxes paid by households to increase aggregate demand, how should G change and ho..

Pay for the acquisition and construction of public parks : Suppose that a city mayor proposes to pay for the acquisition and construction of public parks by implementing a 7-year local sales tax. Someone argues that the financing mechanism should instead be something that is spread out over more time, noting..

Targeted jobs tax credit-tax credit have affected wages : The Targeted Jobs Tax Credit (TJTC) – enacted in 1978 and expired in 1994 – offered employers a tax credit for each less-skilled worker they employed. Assume that the tax credit was fixed at $5 per-hourworked by a less-skilled worker. According to ne..

Marginal cost of producing extra unit of microprocessor : Two microprocessor manufacturers, one in Japan, one in US selling products to only the US customers. Initially, 1 US dollar equals to 100 Yen (e = 100 Y/$) and the market price for a microprocessor is $20. The marginal cost of producing an extra unit..

Express the production function in per worker terms : Express the production function in per worker terms. Thus, y = f (k) where y = Y/L and k=K/L. Suppose that both countries start off with a capital stock per worker of 2 (i.e. k = 2). What are the levels of income per worker and consumption per worker..

Opportunity cost-perfect competition and social welfare : If there was an economic drop of 5%, how a short and long run firm supply and demand would be affected and what is the decision a CEO must take. In your response, please consider the PPF curve, opportunity cost, perfect competition, and social welfar..

What price would be the short-run breakeven point : If the price of chicken wings drops to $2.00, how many chicken wings should be produced then? Are you making profit above all costs at $2 chicken wings? At what price would be the short-run breakeven point? At what price should the firm shut down?

User Account

All Pages