Suppose that government levies a payroll tax on employers and employees to finance employment insurance a. Using a clear, well- labeled supply- demand diagram, show how payroll tax affects labor market outcome, e.g. employment and market wage rates. b. On the graph, show the workers and firms surplus before and after the tax and deadweight loss created by the tax. c. Assume that the elasticity of labor supply and demand are 0.2 and -0.6, respectively. с. According to the law the payroll tax is split between employees and employers so that firms pay 58 percent of the tax, and employees pay 42 percent. Do you think parliament can mandate this division of the tax burden?

Suppose that government levies a payroll tax on employers and employees to finance employment insurance a. Using a clear, well- labeled supply- demand diagram, show how payroll tax affects labor market outcome, e.g. employment and market wage rates. b. On the graph, show the workers and firms surplus before and after the tax and deadweight loss created by the tax. c. Assume that the elasticity of labor supply and demand are 0.2 and -0.6, respectively. с. According to the law the payroll tax is split between employees and employers so that firms pay 58 percent of the tax, and employees pay 42 percent. Do you think parliament can mandate this division of the tax burden?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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