Elastic Labour Supply and Optimal Taxation in a Model of Sustainable Endogenous Growth

Di Maria, Corrado (October 2001) Elastic Labour Supply and Optimal Taxation in a Model of Sustainable Endogenous Growth. IHS Economics Series 105

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Abstract: This paper presents an endogenous growth model which features elastic labour supply in order to address the distortions created by labour income and consumption taxation. Introducing elastic labour into an AK model greatly changes the structure of the model and raises problems regarding the existence and the stability of a balanced growth path. Another important feature of this paper is the presence of environmental quality both in the utility and in the production functions and the requirement that the growth path of the economy be environmentally sustainable. Within the framework outlined, the focus of the analysis is on optimal taxation and on the effects of government policy on the growth path of the economy. The basic resultis that even in this simple setting the interaction between the economic and the ecological system are complex and the policy outcomes crucially depend on the parameters of the model.;

Item Type: IHS Series
Keywords: 'Endogenous growth' 'Sustainable growth' 'Environmental externalities' 'Elastic labour supply'
Classification Codes (e.g. JEL): O41, D62, Q28, E62
Status: Published
Date Deposited: 26 Sep 2014 10:37
Last Modified: 21 Jul 2017 05:24
URI: http://irihs.ihs.ac.at/id/eprint/1376

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