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The Employment and Hours Effects of a Marginal Employment Subsidy

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  • Hart, Robert A

Abstract

This paper extends a standard labor demand model in order to study the microeconomic effects of marginal employment subsidies. The analysis emphasizes the distinction between workers and hours per worker, and investigates subsidies with respect to both quasi-fixed and variable labor costs. The policy of granting marginal employment subsidies conditional on mandatory workweek reductions, as recently practiced in several European countries, is also investigated. Additionally, the study incorporates a comparative evaluation of general and marginal employment subsidies. Copyright 1989 by Scottish Economic Society.

Suggested Citation

  • Hart, Robert A, 1989. "The Employment and Hours Effects of a Marginal Employment Subsidy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 36(4), pages 385-395, November.
    • Handle: RePEc:bla:scotjp:v:36:y:1989:i:4:p:385-95
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    References listed on IDEAS

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    1. FitzRoy, Felix R & Hart, Robert A, 1985. "Hours, Layoffs and Unemployment Insurance Funding: Theory and Practice in an International Perspective," Economic Journal, Royal Economic Society, vol. 95(379), pages 700-713, September.
    2. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-482, June.
    3. Luskin, David, 1986. "The Case for Subsidising Extra Jobs: A Comment," Economic Journal, Royal Economic Society, vol. 96(381), pages 212-215, March.
    4. Hart, Robert A., 1984. "Worksharing and factor prices," European Economic Review, Elsevier, vol. 24(2), pages 165-188, March.
    5. Layard, P R G & Nickell, S J, 1980. "The Case for Subsidising Extra Jobs," Economic Journal, Royal Economic Society, vol. 90(357), pages 51-73, March.
    6. Whitley, J D & Wilson, R A, 1983. "The Macroeconomic Merits of a Marginal Employment Subsidy," Economic Journal, Royal Economic Society, vol. 93(372), pages 862-880, December.
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    Cited by:

    1. Andreas Knabe & Ronnie Schöb, 2013. "Subsidizing extra jobs: promoting employment by taming the unions," Oxford Economic Papers, Oxford University Press, vol. 65(4), pages 807-831, October.
    2. Chun-chieh Huang & Ching-chong Lai & Juin-jen Chang, 2004. "Working Hours Reduction and Endogenous Growth," IEAS Working Paper : academic research 04-A006, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    3. Andreas Knabe & Ronnie Schöb & Joachim Weimann, 2006. "Marginal Employment Subsidization: A New Concept and a Reappraisal," Kyklos, Wiley Blackwell, vol. 59(4), pages 557-577, November.
    4. Roland Müller, 1998. "Fixe Lohnnebenkosten als Erklärungsursache für Arbeitslosigkeit: tarifpolitische Implikationen für ein "Bündnis für Arbeit"," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 67(4), pages 286-299.
    5. Chang, Juin-jen & Huang, Chun-chieh & Lai, Ching-chong, 2007. "Working hours reduction and wage contracting style in a dynamic model with labor adjustment costs," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 971-993, March.
    6. Juin‐Jen Chang & Chung‐Cheng Lin & Ching‐Chong Lai, 1999. "The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 156-166, June.
    7. Brian BURKITT & Milford BATEMAN, 1993. "The Operation Of A Local Economic Strategy Of Employment Generation In A Mixed Economy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 64(2), pages 257-272, April.

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