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Minimum Wage and Capital Taxes
Author(s) -
Chao ChiChur,
Yu Eden Siu Hung
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12078
Subject(s) - economics , minimum wage , capital (architecture) , welfare , capital income , small open economy , labour economics , general equilibrium theory , wage , open economy , monetary economics , tax reform , macroeconomics , international taxation , market economy , monetary policy , archaeology , history , exchange rate
Using a general equilibrium model, this paper examines the employment and welfare effects of minimum wages coupled with capital taxes in a small open economy. The individual and joint optimal policies for a minimum wage and capital taxes are derived and explained. Specifically, policy reform to introduce a minimum wage while lowering the capital tax can be justified for some economies, notably, H ong K ong.