Consider a tax imposed on labor in a labor-intensive industry and not on other sectors of the

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Consider a tax imposed on labor in a labor-intensive industry and not on other sectors of the economy. An example is Britain’s Selective Employment Tax that was applied to labor-intensive service industries. Explain the impact of that tax on the demand for labor, being sure to explain the factor substitution effect, the output effect, and the net effect.
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Public Finance

ISBN: 978-1111526986

2nd edition

Authors: John E. Anderson

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