The targeted jobs tax credit

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Reference no: EM131103643

The Targeted Jobs Tax Credit (TJTC) existed from 1979 through 1994. It offered employers a tax credit for each “less-skilled” worker they employed. Assume that the tax credit was fixed at $5 per- hour-worked by a less-skilled worker. According to neoclassical theory, how should this tax credit have affected the labor demand curve for less-skilled workers? What are the predicted effects on wages and employment? How does the share of the credit captured by workers versus employers, and the employment level, depend on the elasticities of the labor supply and labor demand curves? You will need graphs in your answer.

Reference no: EM131103643

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