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- Title
Property rights enforcement and wage inequality.
- Authors
Pi, Jiancai; Zhang, Pengqing
- Abstract
This paper establishes a general equilibrium model to investigate how property rights enforcement impacts wage inequality when unproductive and productive activities coexist. We consider enforcement funded by a gross income tax, a labor tax, or a capital tax, and find that in all of the three schemes, when property rights enforcement is relatively efficient and the skilled sector is more capital intensive than the unskilled sector, an increase in enforcement will decrease wage inequality. However, the critical values of property rights enforcement efficiency under the three funding sources are different. In particular, the critical value in the scheme of a capital tax is always smaller than that in the scheme of a gross income tax, which suggests that if the skilled sector is more capital intensive than the unskilled sector, switching the funding sources of enforcement from a gross income tax to a capital tax can help mitigate wage inequality.
- Subjects
INCOME inequality; PROPERTY rights; CAPITAL levy; GROSS income; WAGE decreases; VALUATION of real property; INCOME tax
- Publication
Manchester School (1463-6786), 2023, Vol 91, Issue 5, p467
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/manc.12449