The effect of the tax on the equilibrium wage

Reference no: EM13200741

Payroll Tax- You are an economic consultant to a city that just imposed a payroll tax of $1 per hour of work. This payroll tax is paid by workers through a payroll deduction; for each hour of work, the employer deducts $1 and sends the money to the city government. The initial wage before the tax is $10, and total employment is 20,000 hours per day.

Use a graph to show the effect of the tax on the equilibrium wage and employment.

Reference no: EM13200741

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