Two-sector perspectives on the effects of payroll tax cuts and their financing

• Published in: Journal of public economics Vol. 93; no. 1; pp. 176 - 190
• Main Authors: Petrucci, Alberto, Phelps, Edmund S.
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.02.2009; Elsevier
• Series: Journal of Public Economics
• Subjects: Capital goods; Consumer goods; Financing methods; Income tax; Labor supply; Labour; Life cycles; Overlapping-generations; Overlapping-generations model; Payroll tax; Payroll tax Labor supply Overlapping-generations Wealth accumulation Two-sector economy; Tax rates; Two-sector economy; Wealth; Wealth accumulation; E62; Labor supply; Overlapping-generations; H22; J22; Payroll tax; Wealth accumulation; O41; Two-sector economy

This paper analyzes the consequences of lifting from labor some of the burden of taxation in a life-cycle two-sector setup where a consumption good is produced alongside a capital good. The analysis focuses on the implications of alternative ways of financing payroll tax cuts in closed and small-ope...