What will happen to
a. The supply of labour and why?
b. The demand for labour and why?
c. The equilibrium before-tax wage rate and why?
d. The equilibrium after-tax wage rate and why?
The government is considering raising the tax rate on labour income and asks you to report on the supply-side effects of such an action. Answer the following questions using appropriate graphs. You are being asked about directions of change, not exact magnitudes.