Labor Economics
8th Edition
ISBN: 9781260484434
Author: George Borjas
Publisher: Mcgraw-hill Higher Education (us)
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Question
Chapter 4, Problem 5RQ
To determine
The impact of payroll tax on wages and employment.
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In which case is the total amount of a payroll tax paid by employees through lower wages?
Group of answer choices
When the labor supply curve is horizontal.
When the labor supply curve is vertical..
When the labor demand curve is vertical.
When the labor supply curve is downward sloping at a 45-degree angle.
When unemployment is widespread and the wage is above its market clearing level, a cut in employer payroll tax will
Group of answer choices
drive up wages but have little to no effect on employment and unemployment.
increase employment, reduce unemployment, and have little effect on wages.
be largely ineffective.
benefit employers and have no effect on workers.
Suppose a tax on wages is passed to finance a government program. The legislation orders a tax of 12.4% on per hour wage earnings with 6.2% to be paid by employers and 6.2% to be paid by workers. Assume labor supply is more inelastic than labor demand. Under these assumptions, describe the economic burden of the tax?
a.The economic burden will be fully on workers.
b. The economic burden will be fully on employers.
c. The economic burden will be distributed in equal amounts to workers and employers.
d. The economic burden will be mostly on workers and less on employers.
Referred to the above graph of the labor market. The government decides to impose a wage tax as shown on the graph. If the number of workers hired after the imposition of the tax is 800 then the total amount of tax is $___
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Similar questions
- In the United States, labor supply tends to be inelastic relative to labor demand, and according to law, payroll taxes are essentially assessed evenly between workers and firms. Given the above situation, are workers or firms more likely to bear the additional burden of an increased payroll tax in the United States? Could this burden be shifted to the firms by assessing the increase in payroll taxes on just firms rather than having firms and workers continue to be assessed payroll taxes equally?arrow_forwardOn a graph of the labor market, show the effects of an increase in the payroll tax.arrow_forwardNew Zealand along with many other countries nas a progressive tax system. What is a proaressive tax system! What effect can a progressive tax system have on work incentives? Explain why.arrow_forward
- no handwriting, please Illustrate and carefully explain the impact of an increase in the income tax ratefrom 25 percent to 35 percent on the demand for labour, supply of labour,equilibrium wage and level of employment.arrow_forwardQ8. I am missing an answer. It’s more than 2 of my answers.arrow_forwardBiden wants to raise the 15 dollars minimum wage. If you own your contractor do you have to pay that amount to your employees or not since it is your business and not a federal business. Please explain.arrow_forward
- instructure.com/courses/11047/quizzes/121411/take The following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax was imposed, and Qe was the equilibrium quantity. After the tax, Pc is the price that consumers pay, and Ps is the price that producers receive. Qr units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers. nº P₁ " A A B M C Q₁ Which areas represent consumer surplus before the tax is imposed? C+G+E B-C Q₂arrow_forwardExplain how the changes in wages can affect equilibrium.arrow_forward6arrow_forward
- Describe the two possible effects that an increase in the wage rate can have on labor supply. Which effect do you expect to dominate under normal circumstances?arrow_forward"In light of the concept of 'supply and demand,' explain how a significant increase in the minimum wage might impact employment levels and product prices in a competitive market. Consider both short- term and long-term effects, and discuss any potential differences in impact across various sectors of the economy."arrow_forwardWhat is the link between marginal revenue product and wages? Does this notion of marginal revenue product and wages conflict with minimum wage laws?arrow_forward
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