La Roche, U., "Is there a Cause-Effect Relationship Between Unemployment and Taxation Level?", 1994
ua435
The debate on the causes of present high and apparently staying unemployment is just starting to get the grand picture together. A preliminary investigation of a two-sector economic model is presented. Its focus is the interactions between wages in the productive sector and rents and subsides in the non-productive sector. Aging populations, late entry into the labor market, a growing administration headcount and widespread subsidizing add up to taxes and other fiscal measures. Their driving force is modelled to be the recompensation expected relative to the wages before tax of the productive sector. There are three different behavioral-modes identified: - full employment policy will result in a stable employment inverse to the expected recompensation of the Non-Producing sector. - hire and fire policy will get a stable mean taxation level, but with oscillations of some twenty years duration at least. - preventative hire and fire will induce catastrophical changes of employment and tax-income. A weak interaction composite model of this two-sector model into an available longwave model further reinforces, that a high rent-and-subsidizing expectation kills employment and reduces the so called self-ordering of capital production in the longwave model context, except for businesses with high profits. Also, the longwave periods is influenced strongly in this composite experiment. The context for interpretations of the results is proposed to be the national economies with their taxation in global competition.
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