Policy analysis in the presence of distorting taxes
By: PARRY, Ian W. H
.
Contributor(s): OATES, Wallace E.
Material type: 
ArticlePublisher: 2000Journal of Policy Analysis and Management 19, 4, p. 603-613Abstract: This article first describes the new literature in environmental economics on the socalled "double-dividend" and then explores its implications for a broad range of economic issues. This literature reveals that in a second-best , general-equilibrium setting , environmental measures raise costs and prices and thereby reduce the real wage. This rise in the cost of living reduces slightly the quantity of labor supplied in an already highly distorted labor market, giving rise to losses in social welfare that can be large relative to the basic gains from a cleaner environment. These losses can be offset to some extent by using revenues (if any) from the environmental programs to reduce existing taxes on labor. This ame line of analysis applies to many programs and institutions in the economy that raise te cost of living: tariffs and quotas on imports, agricultura price-support programs, monopoly princing, programs of occupational licensure that limit entray, and many others. Thus, traditional, partial-equilibrium benefit-cost analysis appears, in many instances, to have unwittingly omitted fromthe calculations a potentially quite significant class of social costs
| Item type | Current location | Collection | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Periódico | Biblioteca Graciliano Ramos | Periódico | Not for loan |
This article first describes the new literature in environmental economics on the socalled "double-dividend" and then explores its implications for a broad range of economic issues. This literature reveals that in a second-best , general-equilibrium setting , environmental measures raise costs and prices and thereby reduce the real wage. This rise in the cost of living reduces slightly the quantity of labor supplied in an already highly distorted labor market, giving rise to losses in social welfare that can be large relative to the basic gains from a cleaner environment. These losses can be offset to some extent by using revenues (if any) from the environmental programs to reduce existing taxes on labor. This ame line of analysis applies to many programs and institutions in the economy that raise te cost of living: tariffs and quotas on imports, agricultura price-support programs, monopoly princing, programs of occupational licensure that limit entray, and many others. Thus, traditional, partial-equilibrium benefit-cost analysis appears, in many instances, to have unwittingly omitted fromthe calculations a potentially quite significant class of social costs
Click on an image to view it in the image viewer
There are no comments for this item.