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Labour Supply Incentives in Alternative Tax and Transfer Schemes: A Diagrammatic Introduction
Author(s) -
Creedy John
Publication year - 2004
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.2004.00326.x
Subject(s) - diagrammatic reasoning , incentive , citation , economics , public economics , positive economics , computer science , microeconomics , library science , programming language
The aim of this paper is to illustrate some of the complexities involved in modelling the incentive effects of taxes and transfers, using only basic diagrammatic methods. It describes a range of diagrams which are helpful in thinking about the design of tax and transfer systems and their potential effects on labour supply behaviour. Emphasis is given to the role of highly nonlinear budget constraints and the resulting wide range of labour supply responses.