Consider a new per-worker employment tax on workers
Course:- Microeconomics
Reference No.:- EM13700180

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Consider a new per-worker employment tax on workers (where previously there was no tax). Outline the consequences of this tax on the local labor market. Use appropriate, clear, and well-labeled diagrams. In your answer show (1) the burden of the tax on workers and firms, (2) the effect of the tax on employment, and (3) the effect of tax on the market wage. Which of the above (burden, employment, and/or market wage) change if we instead impose the tax on employers?

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