Earnings, EITC, and Employment Responses to a $15 Minimum Wage: Will Low-Income Workers Be Better Off?

2019 ◽  
Vol 33 (4) ◽  
pp. 331-350 ◽  
Author(s):  
Fahad Fahimullah ◽  
Yi Geng ◽  
Bradley Hardy ◽  
Daniel Muhammad ◽  
Jeffrey Wilkins
Keyword(s):  
Minimum Wage ◽  
Low Income ◽  
Computable General Equilibrium ◽  
Computable General Equilibrium Model ◽  
Perfect Competition ◽  
Tax Credit ◽  
Wage Policy ◽  
Policy Makers ◽  
Consumer Prices ◽  
The City

The District of Columbia will increase its minimum wage to $15 per hour in 2020. The city also provides a local refundable earned income tax credit (EITC) equal to 40% of the federal EITC. Using a computable general equilibrium model, the authors estimate the economic impact of the $15 wage policy. They also use a tax policy microsimulation model to estimate how the city’s EITC interacts with a higher minimum wage. Overall, the authors find that the higher minimum wage will produce significant income gains for most of the city’s low-wage workers, with relatively few job losses. Additionally, they forecast that most city EITC recipients will receive a lower EITC, but higher earnings more than offset the reduced tax credit. The model predicts that this policy change would largely be funded by higher consumer prices, lower firm profits, and higher business productivity. These predictions are subject to important caveats, including a local labor market that is likely inadequately characterized in a model assuming perfect competition. Economic policy makers should therefore use such modeling approaches as a powerful but ultimately imperfect tool.

The Impact of the Public Expenditure Cuts Policy on the Labor Market in Vietnam

2012 ◽  
pp. 22-46
Author(s):  
Huong Nguyen Thi Lan ◽  
Toan Pham Ngoc
Keyword(s):  
Labor Market ◽  
Computable General Equilibrium ◽  
Impact Evaluation ◽  
Public Expenditure ◽  
Computable General Equilibrium Model ◽  
Living Standard ◽  
Input Output ◽  
Policy Makers ◽  
The Public ◽  
The Impact

The purpose of this study is to evaluate the impact of public expenditure cuts on employment and income to support policies for the development of the labor mar- ket. Impact evaluation is of interest for policy makers as well as researchers. This paper presents a method – that is based on a Computable General Equilibrium model – to analyse the impact of the public expenditure cuts policy on employment and income in industries and occupations in Vietnam using macro data, the Input output table, 2006, 2008 and the 2010 Vietnam Household Living Standard Survey.

scholarly journals Selected Socioeconomic Characteristics of Waste Collector Children in Dhaka City

2020 ◽  
Author(s):  
Mohammad Saeed Hossain ◽  
Md. Mahmudul Alam ◽  
Niaz Ahmed Khan
Keyword(s):  
Low Income ◽  
Dhaka City ◽  
Socioeconomic Conditions ◽  
Waste Collection ◽  
Economic Activities ◽  
Vulnerable Group ◽  
Policy Makers ◽  
Socioeconomic Characteristics ◽  
Low Income Families ◽  
The City

Generally in the city areas of developing countries, children from the poor and low income families are involved in a range of risky, unhealthy, and environmentally hazardous economic activities and trades. One of these common activities concerns collecting recyclable waste form the street or landfill areas. To understand the socioeconomic characteristics of these waste collector children, this study collected data from fifty children who engaged in waste collection in the landfill of Matuail in Dhaka City, Bangladesh. The data were collected by questionnaire guide, and the samples were selected based on convenient random sampling. This study analyses the socioeconomic conditions of these waste collector children by focussing on such characteristics as their demographic profile, economic affiliation, and nature of the waste collection task. This empirical study may inform and illuminate the relevant policy makers and field activists in widening their understanding of the life and living of this vulnerable group.

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.

scholarly journals HOUSEHOLD DISTRIBUTIONAL AND REVENUE RECYCLING EFFECTS OF THE CARBON PRICE IN AUSTRALIA

2015 ◽  
Vol 06 (03) ◽  
pp. 1550012 ◽  
Author(s):  
DISNA SAJEEWANI ◽  
MAHINDA SIRIWARDANA ◽  
JUDITH MCNEILL
Keyword(s):  
Low Income ◽  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Carbon Price ◽  
Computable General Equilibrium Model ◽  
Party Leader ◽  
Household Level ◽  
Revenue Recycling ◽  
Lump Sum ◽  
Income Groups

The Australian Government introduced a carbon tax from 1 July 2012. The then opposition party leader, now Prime Minister, introduced legislation to repeal the tax. Amongst the many issues being debated is that of the incidence of the tax. In this study, we explore household consumption and income changes arising from a A$23 carbon price employing a computable general equilibrium model (entitled A3E-G). The model has been calibrated using a social accounting matrix database of Australia with 10 household income groups. This carbon price generates A$6.39 billion revenue while reducing Australia's carbon emissions by 11%. The empirical evidence suggests household level impacts range from proportional to mildly progressive tax incidence. In this study, we propose four revenue recycling options to overcome any undesirable distributional effects from the carbon price. Results indicate that revenue recycling through income tax reductions and uniform lump sum transfers improves post tax income levels and welfare towards middle and high income groups. A nonuniform lump sum transferring option favors low income households. Uniform reductions in commodity tax rates are not found to be welfare improving but we find positive impacts on export competitiveness from this option.

Minimum Wages, Equity and Unemployment

1996 ◽  
Vol 7 (2) ◽  
pp. 198-212 ◽  
Author(s):  
J.W. Nevile
Keyword(s):  
Social Security ◽  
Minimum Wage ◽  
Low Income ◽  
Empirical Studies ◽  
Equilibrium Analysis ◽  
Perfect Competition ◽  
Wage Rates ◽  
Income Inequalities ◽  
Teenage Employment ◽  
Low Income Families

Increasing income inequalities in Australia increase the need to protect the incomes of low income families. It is difficult for the taxation and social security system alone to do this. Minimum wage rates have a role to play. Thus, the question of their effects on employment can not be sidestepped Traditional analysis of this question is flawed by the assumption of perfect competition and the use of particular equilibrium analysis. Labour markets have many features which distinguish them from perfectly competitive markets and feedbacks from other markets can not be ignored. Theory alone can not settle this question. A large number of empirical studies are surveyed. A widespread consensus exists that effects of minimum wage rises on adult employment are virtually non-existent A number of studies find effects on teenage employment. A number of others do not. However, even those who find statistically significant effects agree that they are small.

scholarly journals Minimum Wage and National Basic Food Basket: Analysis on the Evolution of Milestones in Brazilian Food Security Policy (OR21-02-19)

2019 ◽  
Vol 3 (Supplement_1) ◽  
Author(s):  
Flavia Sarti ◽  
Andre Santana
Keyword(s):  
Food Security ◽  
Minimum Wage ◽  
Low Income ◽  
Security Policy ◽  
Healthy Eating Index ◽  
Nutritional Requirements ◽  
Wage Policy ◽  
Food Items ◽  
Food Basket ◽  
The Cost

Abstract Objectives The objective of the study was to analyze the role of minimum wage policy in Brazil for assurance of food security among low income individuals using two approaches: (1) evolution of its purchase power in relation to the cost of national basic food basket throughout time, and (2) nutritional adequacy of food items comprising the national basic food basket in relation to nutritional requirements of individuals relying on minimum wage income. Methods Historical data on the evolution of the Brazilian minimum wage and national basic food basket ranging from 1959 until 2018 were compiled and updated using official inflation rates. The food items comprising the national basic food basket were converted in nutrients according to Brazilian food composition tables. Additional information from the National Household Expenditures Survey in 2002–2003 and 2008–2009 were used to estimate the distribution of individuals according to income level, and calculate nutritional requirements. Overall nutritional quality of national basic food basket was also assessed using the Healthy Eating Index Revised, adapted for the Brazilian population. Results The average income earned in the lowest quintile of income was lower than the minimum wage in 2002–2003 and 2008–2009. Additionally, the cost of the national basic food basket comprised approximately 60% to 140% of one minimum wage during major part of the period. The nutritional composition of the national basic food basket, initially proposed to estimate the minimum wage, presented high content of calories, sodium, saturated fat and added sugar in comparison to recommendations for adults, and insufficient amounts of important nutrients (calcium, potassium and vitamin A) and food groups (fruits, vegetables and cereals). Conclusions The minimum wage policy has historical importance in the assurance of food security in Brazil; however, it is important to acknowledge the need for revision in the national basic food basket and its use as standard measure for estimation of living standards in Brazil. Funding Sources The study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - Brasil (CAPES) - Finance Code 001; and by the Conselho Nacional de Desenvolvimento Científico e Tecnológico - Brasil (CNPq - Proc. 430850/2016-6). Supporting Tables, Images and/or Graphs

Welfare implications of minimum wage increase in Nigeria

2017 ◽  
Vol 44 (12) ◽  
pp. 2141-2156 ◽  
Author(s):  
Taiwo Aderemi ◽  
Fidelis Ogwumike
Keyword(s):  
Minimum Wage ◽  
Computable General Equilibrium ◽  
Wage Gap ◽  
Negative Impact ◽  
Consumer Price Index ◽  
Wage Increase ◽  
Minimum Wage Increase ◽  
Skilled Workers ◽  
Wage Policy ◽  
Content Type

Purpose The primary motive of a minimum wage policy is to provide a wage floor for poorly paid workers and improve their welfare. In Nigeria, real minimum wage declined by 60 per cent between 1974 and 2011, thus reducing the welfare of workers. The wage gap between low skilled and high skilled workers have also widened over the years in favour of the latter. There are concerns that the series of minimum wage increase in Nigeria may not be welfare-enhancing. The paper aims to discuss these issues. Design/methodology/approach This study examined the welfare effects of minimum wage increase in Nigeria using a computable general equilibrium model. The model was calibrated using a 2006 Social Accounting Matrix and four sets of scenarios (20, 35, 50 and 140 per cent wage increases), were simulated. Findings The findings show that employers substituted other labour categories for minimum wage workers. This increases the wage rates of other labour. The consumer price index also increased as firms partly pass-on increased labour cost to consumers. Generally, the simulations show that minimum wage policies worsen the welfare of its intended beneficiaries, due to negative impact on prices and employment. Originality/value This study deviates from existing studies on minimum wage in Nigeria, by providing a proper disaggregation of the labour market that represents the Nigerian economy. In this regard, the informal sector was accommodated and the potential impact of the minimum wage on this sector determined. It also adopted the equivalent variation welfare measure which incorporates price and consumption effects in measuring welfare.

scholarly journals Environmental Taxation and Induced Structural Change in an Open Economy: The Role of Market Structure

2008 ◽  
Vol 9 (1) ◽  
pp. 17-40 ◽  
Author(s):  
Christoph Böhringer ◽  
Andreas Löschel ◽  
Heinz Welsch
Keyword(s):  
Structural Change ◽  
Open Economy ◽  
Computable General Equilibrium ◽  
Imperfect Competition ◽  
Economies Of Scale ◽  
Carbon Tax ◽  
Computable General Equilibrium Model ◽  
Perfect Competition ◽  
Environmental Taxation

Abstract Studies of structural change induced by environmental taxation usually proceed in a perfect-competition framework and typically find structural change to be quite moderate under realistic emission reduction scenarios. By observing that some of the industries affected are likely to operate under imperfect rather than perfect competition, additional mechanisms emerge which may amplify structural change beyond the extent identified as yet. Especially, changes in economies of scale may arise which weaken or strengthen the competitive position of industries over and above the initial cost effect. Using a computable general equilibrium model for Germany to examine the effects of a unilaterally introduced carbon tax, we find that induced structural change is more pronounced under imperfect competition than under perfect competition. At the macroeconomic level, we find that aggregate losses in economies of scale are larger than aggregate gains, implying that the total costs of environmental regulation are higher under imperfect competition than under perfect competition.

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