ECO 1104 Lecture Notes - Progressive Alliance Of Socialists And Democrats, Tax Incidence, Economic Equilibrium

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

Small business people hate it, claiming that it exacerbates unemployment among the young and the unskilled. Evidence indicates that both sides of the debate are full of it . The mw does reduce employment, but only slightly. Workers do not get laid off, but job creation is less than what would otherwise be the case. Most mw earners do not live in poor families, and thus the program is poorly targeted. The economist"s prescription: give low income workers direct payments. Never as much as forecasted because the size of the market shrinks whenever taxes are imposed. Answer #1: the firm has the legal responsibility for remitting the tax to the government, so one might say fallaciously that firms pay it. Answer #2: consumers are explicitly charged the tax (at least that is what vendors say), so one might say fallaciously that consumers pay it. Suppose that a tax is imposed on sellers.