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Should incometaxes be lowered to encourage more people into work?
Member rating: No Rating | Words: | Submitted: Wed Nov 26 2003
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Should income taxes be lowered to encourage more people into work? How it may have occurred The demand for labour is shown as being inversely related to the price of labour, implying that the demand for labour will fall as the price of labour increases. The equilibrium level of q1 is thus determined by the intersection of the demand and supply curves, and this occurs at the the equilibrium wage rate w1. At this wage rate , q1 people will offer themselves for employment, and this will be equal to the number of people that employers are willing to higher at the wage rate. Thus there is no unemployment, or thus there is no involuntary unemployment. If demand for labour shifted to the left, implying a fall in demand for labour, as in Fig 1. If real wages are flexible downwards are flexible downwards , then the new equilibrium level of unemployment...
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