prob_set_02

prob_set_02 - University of California, Davis Department of...

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University of California, Davis Department of Economics ECONOMICS 131 Spring 2008 L. Jay Helms Problem Set #2: General Equilibrium Tax Incidence 1. The Burden of a Selective Payroll Tax (continued) Suppose that the government decides to impose an extra payroll tax on employees of educational institutions to finance the maintenance and improvement of national parks. Assume that all workers are equally productive and that labor is perfectly mobile between the educational and the noneducational sectors. Use fully labeled diagrams to answer the following questions: b. Suppose that the educational and the noneducational sectors have the same capital/labor ratios and also the same elasticities of substitution between capital and labor. To what extent would the burden be shifted from labor to capital? c. How would your answer have been different if the educational sector were relatively capital intensive? d.
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prob_set_02 - University of California, Davis Department of...

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