scholarly journals What Are the Economic and Labour Market Effects of an Income Tax Reduction Targeted at Older Workers?

2012 ◽  
Vol 2012 ◽  
pp. 1-12
Author(s):  
Maxime Fougère ◽  
Simon Harvey ◽  
Bruno Rainville
Keyword(s):  
Labour Market ◽  
Computable General Equilibrium ◽  
Older Workers ◽  
Income Tax ◽  
Labour Supply ◽  
Private Investment ◽  
Computable General Equilibrium Model ◽  
Market Effects ◽  
Tax Reduction ◽  
Macroeconomic Impact

This paper explores the economic and labour market effects of implementing a tax reduction targeted at older workers. The analysis is conducted with a life-cycle computable general equilibrium model calibrated on Canadian data. The analysis shows that implementing a permanent income tax reduction for workers aged 60 and over has only small macroeconomic effects because the labour supply increase of older workers is partly offset by a reduction in the labour supply at core ages. This induced effect also discourages savings and generates crowding out through private investment but has a favourable impact on lifetime economic welfare. The macroeconomic impact is much larger when the income tax reduction is temporary because workers no longer reduce their hours at core ages and there is no reduction in savings. However, since only current middle-aged and older workers benefit from the tax cut, a temporary income tax cut reduces intergenerational equity.

scholarly journals REVENUE RECYCLING AND COST EFFECTIVE GHG ABATEMENT: AN EXPLORATORY ANALYSIS USING A GLOBAL MULTI-SECTOR MULTI-REGION CGE MODEL

2018 ◽  
Vol 09 (01) ◽  
pp. 1840009 ◽  
Author(s):  
YUNFA ZHU ◽  
MADANMOHAN GHOSH ◽  
DEMING LUO ◽  
NICK MACALUSO ◽  
JACOB RATTRAY
Keyword(s):  
Computable General Equilibrium ◽  
Income Tax ◽  
Capital Investment ◽  
Economic Cost ◽  
Cost Effective ◽  
Cge Model ◽  
Revenue Recycling ◽  
Lump Sum ◽  
Tax Reduction ◽  
Investment Subsidy

Carbon pricing generates revenues which can be recycled back into the economy in different ways to help mitigate the economic cost of abatement. These include, lump-sum transfers to households; reducing existing distortionary taxes, such as income taxes on labor and capital; investment in technology funds leading to energy/emissions efficiency improvements; and/or infrastructure developments that help expedite the adoption of low or lower carbon-intensive technologies. In this paper, we undertake illustrative simulations to explore how different revenue recycling options influence the overall economic outcome in terms of broad macroeconomic indicators, such as Gross Domestic Product (GDP) or household welfare. Environment and Climate Change Canada’s (ECCC) multi-sector, multi-region Computable General Equilibrium (CGE) model (EC-MSMR) is used to simulate various revenue recycling options. These simulations are undertaken for the U.S. economy. The main findings of the paper are: (i) using carbon revenue for a general income tax reduction or investment subsidy is more advantageous than a lump-sum transfer to U.S. consumers in terms of welfare or GDP; and (ii) using carbon revenue for a sector-based subsidy such as renewable energy is more disadvantageous than a lump-sum transfer to consumers. In terms of accumulated welfare effects, our results indicate that the best carbon revenue recycling option is the investment subsidy or capital income tax reduction in the longer horizon; labor tax reductions yield the best outcome in the shorter horizons.

scholarly journals Sectoral Responses, Macroeconomic Impact and Household Welfare: GST Policy for Malaysia Economy

2020 ◽  
Vol 15 (1) ◽  
pp. 21-39
Author(s):  
Juliana Mohd Abdul Kadir ◽  
Mohamed Aslam Gulam Hassan ◽  
Zarinah Yusof
Keyword(s):  
Computable General Equilibrium ◽  
Government Expenditure ◽  
Computable General Equilibrium Model ◽  
Household Welfare ◽  
Government Revenue ◽  
Goods And Services ◽  
Income Groups ◽  
Negative Effect ◽  
Macroeconomic Impact ◽  
The Impact

Goods and services tax (GST) has been a controversial topic in Malaysia when it was first implemented. This study examines the impact of the GST on the Malaysian economy from three major perspectives. First, it investigates the consequent changes in sectoral responses, including output and prices for 15 main sectors. Second, the study presents the results of GST impact on seven macroeconomic variables, namely, consumption, investment, government revenue, government expenditure, export, import, and gross domestic product. Third, the results of household welfare are discussed. A computable general equilibrium model is utilized to simulate GST impact on the Malaysian economy, and a simple comparative static model is performed. The results prove that the higher the GST rate, the higher is the impact on each sector. The sectors most affected by GST are communication and ICT, and the electricity and gas sectors. By contrast, agriculture, forestry and logging, and the petroleum and natural gas sectors are the least affected. Consumption and investment receive the largest negative effect, whereas government revenue and expenditure show the largest positive effect. The study likewise finds that by lowering GST rate, the welfare loss was minimized and the higher-income groups were affected more than the lower-income groups.

Green Jobs and Renewable Electricity Policies: Employment Impacts of Ontario's Feed-in Tariff

2012 ◽  
Vol 12 (1) ◽  
Author(s):  
Christoph Böhringer ◽  
Nicholas J. Rivers ◽  
Thomas F. Rutherford ◽  
Randall Wigle
Keyword(s):  
Renewable Energy ◽  
Labour Market ◽  
Computable General Equilibrium ◽  
Labour Force ◽  
Labour Force Participation ◽  
Computable General Equilibrium Model ◽  
Green Jobs ◽  
The Government ◽  
Feed In Tariff ◽  
Employment Impacts

Abstract Policy makers justify renewable energy promotion policies partly on the grounds that such policies have positive employment impacts. We apply a computable general equilibrium model to assess the labour market impacts of the feed-in tariff policy used by the Government of Ontario. We find that although the policy is successful at increasing the employment in the `green' sectors of the economy, the policy is also likely to increase the rate of unemployment in the province, and to reduce overall labour force participation. We conclude that policies designed to promote renewable energy should be promoted for the sake of their environmental impacts, not for their labour market effects.

scholarly journals Simulating Corporate Income Tax Reform Proposals with a Dynamic CGE Model

2017 ◽  
Vol 9 (5) ◽  
pp. 20 ◽  
Author(s):  
Keshab Bhattarai ◽  
Jonathan Haughton ◽  
Michael Head ◽  
David G Tuerck
Keyword(s):  
Computable General Equilibrium ◽  
Income Tax ◽  
Well Being ◽  
The United States ◽  
Computable General Equilibrium Model ◽  
Corporate Income Tax ◽  
Policy Makers ◽  
Tax Rate ◽  
Investment Capital ◽  
Almost All

Opinion leaders and policy makers in the United States have turned their focus to the corporate income tax, which now has the highest statutory rate in the developed world. Using a dynamic computable general equilibrium model (the “NCPA-DCGE Model”), we simulate alternative policies for reducing the U.S. corporate income tax.  We find that reductions in the corporate income tax rate result in significant positive impacts on output, investment, capital formation, employment, and household well-being (for almost all deciles). All of the hypothesized reforms also result in a more-streamlined public sector. These results are plausible insofar as the DCGE model from which they are obtained is parameterized by plausible elasticity assumptions, and incorporates the adjustments in prices, output, employment and investment that result from changes in tax policy.

Analysing labour productivity and its economic consequences in the two Spanish tourist archipelagos

2020 ◽  
pp. 135481662091786
Author(s):  
Federico Inchausti-Sintes ◽  
Ubay Pérez-Granja ◽  
José Juan Morales-Mohamed
Keyword(s):  
Computable General Equilibrium ◽  
Strong Dependence ◽  
Labour Productivity ◽  
Computable General Equilibrium Model ◽  
Economic Consequences ◽  
Stochastic Production Frontier ◽  
Macroeconomic Impact ◽  
Stochastic Production ◽  
Productivity Gains ◽  
Dynamic Computable General Equilibrium

The analysis of productivity in tourism has mainly focused at sectoral level. However, the strong dependence on services and its impact at macroeconomic level in tourism-led economies should require a deeper analysis of productivity, especially when faced with increased cheaper competition. This article estimates a stochastic production frontier and compares the differences in labour productivity between industrial-led and tourism-led provinces in Spain. This analysis provides novel results in terms of technological changes by differentiating industrial-led province from tourism-led province. Finally, these labour productivities are introduced in a dynamic computable general equilibrium model of the two Spanish archipelagos to analyse their respective macroeconomic impact. The results show that the increase in permanent jobs in both economies leads to a convergence in labour productivity with those that are industry led. Furthermore, labour productivity gains improve competitivity against foreign destinations and enhance sectoral diversificación. However, tourism may crowd out domestic demand and investment.

scholarly journals Reforming Social Welfare in Germany: An Applied General Equilibrium Analysis

2006 ◽  
Vol 7 (4) ◽  
pp. 363-388 ◽  
Author(s):  
Stefan Boeters ◽  
Nicole Gürtzgen ◽  
Reinhold Schnabel
Keyword(s):  
General Equilibrium ◽  
Discrete Choice ◽  
Computable General Equilibrium ◽  
Labour Supply ◽  
Choice Model ◽  
Computable General Equilibrium Model ◽  
Equilibrium Analysis ◽  
Applied General Equilibrium ◽  
General Equilibrium Analysis ◽  
Employment Effects

Abstract In this paper, the effects of social assistance reform proposals are discussed for the case of Germany using a computable general equilibrium model that incorporates a discrete choice model of labour supply. This allows us to identify general equilibrium effects of the reforms on wages and unemployment. The simulation results show that general equilibrium wage reactions mitigate labour supply effects and that unemployment in fact decreases. Wage reactions are thus sufficiently strong to prevent additional labour supply from translating into higher unemployment. The simulations indicate that major cuts in welfare payments are necessary to produce substantial employment effects.

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