Suppose the government decides to increase the payroll tax paid by employers. If the labor supply curve has a low elasticity, what will happen to the workers’ wages? Who actually bears the burden of the tax, the workers or the firms? Would it be different if the labor supply had a high elasticity?
Responses
Workers' wages will fall, and the burden of the tax will be on the workers. Yes, it would be different if the labor supply had a high elasticity. The burden would shift more to the firms.
Workers' wages will fall, and the burden of the tax will be on the workers. Yes, it would be different if the labor supply had a high elasticity. The burden would shift more to the firms.
Workers' wages will rise, and the burden of the tax will be on the workers. Yes, it would be different if the labor supply had a high elasticity. The burden would shift more to the firms.
Workers' wages will rise, and the burden of the tax will be on the workers. Yes, it would be different if the labor supply had a high elasticity. The burden would shift more to the firms.
Workers' wages will rise, and the burden of the tax will be on the workers. No, it would not be different if the labor supply had a high elasticity.
Workers' wages will rise, and the burden of the tax will be on the workers. No, it would not be different if the labor supply had a high elasticity.
Workers' wages will fall, and the burden of the tax will be on the workers. No, it would not be different if the labor supply had a high elasticity.