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    Public consumption and unemployment

    Zoega, Gylfi (1997) Public consumption and unemployment. Scottish Journal of Political Economy 44 (3), pp. 269-279. ISSN 0036-9292.

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    This paper introduces public consumption—hence the size of the public sector—into an efficiency wage model of the labour market. The effect of a simultaneous rise in taxes and public consumption on unemployment is derived. There arises an unambiguous positive relationship between the size of the public sector and equilibrium unemployment if public and private consumption are substitutes and wages are taxed. The impact of taxes on consumption on unemployment, although in general not equal to zero, is ambiguous.


    Item Type: Article
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Depositing User: Sarah Hall
    Date Deposited: 01 Dec 2020 18:01
    Last Modified: 02 Aug 2023 18:06


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