Public Economics in Action: The Basic Income/Flat Tax Proposal

By A. B. Atkinson | Go to book overview

5 A Richer Model of the Labour Market

5.1 Introduction

The theoretical model of labour supply used so far has provided a convenient laboratory within which to explore different approaches to the formation of public policy. For this purpose, the simplicity of the model has been an advantage. However, there can be little doubt that, in order to compare the realworld impact of the basic income scheme with that of the existing alternative of social insurance, a richer theoretical framework is necessary. A key element in the comparison is that the existing social security provisions are tied to specific contingencies such as unemployment or sickness, and we need therefore a model in which contingencies of this kind can arise. Unemployment may appear in the optimum taxation frame- work outlined earlier, in the sense of people choosing to work zero hours, but an adequate treatment needs to take account of such factors as efficiency wages, segmentation of the labour market, and involuntary unemployment.

The introduction of these considerations is particularly relevant to the incidence of the policy reform. In the simple optimum taxation analysis it was assumed that the factor prices (and, implicitly, the product prices) are unchanged by the introduction of the Basic Income/Flat Tax. There is assumed to be an infinitely elastic demand for labour of each quality at the specified wage rate. In contrast, the models of general equilibrium tax incidence of the type developed by Harberger ( 1962) tend to make simpler assumptions about the distribution of income, but to allow for changes in factor and product prices. They too are of the Arrow - Debreu type, with unemployment only appearing if labour is in excess supply at a zero wage rate, and what is needed is to extend these models to bring in other explanations of unemployment.

-89-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Public Economics in Action: The Basic Income/Flat Tax Proposal
Table of contents

Table of contents

  • The Lindahl Lectures ii
  • Title Page iii
  • Series Foreword v
  • Preface ix
  • Contents xi
  • List of Figures xii
  • List of Tables xiv
  • 1 - A First Look at the Issues 1
  • 2 - Optimum Flat Tax and Basic Income 24
  • Appendix: Alternative Special Case 44
  • 3 - Optimum Taxation, Differentiation, and Graduation 47
  • 4 - Liberty and Public Choice Theory 62
  • 5 - A Richer Model of the Labour Market 89
  • 6 - Tax-Benefit Models 109
  • 7 - Taxation and Work Incentives 130
  • 8 - Concluding Reflection: The Integration of Public Economics 154
  • References 157
  • Index 165
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 170

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.