Suppose the government imposes a payroll tax of $1 per hour of work and collects the tax
Question:
Suppose the government imposes a payroll tax of $1 per hour of work and collects the tax from employers. Use a graph for the market for labor to show the effect of the payroll tax, assuming the special case of a vertical supply curve of labor. By how much does the new equilibrium wage that employers pay workers fall?
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The 1 per hour of work payroll tax decreases the demand for labor by 1 at every quan...View the full answer
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