Abstract

http://ssrn.com/abstract=426320
 
 

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Investment Subsidies and Wages in Capital Goods Industries: To the Workers Go the Spoils?


Austan Goolsbee


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)


National Tax Journal, Vol. 56, No. 1, Part 2, p. 153-165, March 2003

Abstract:     
This paper looks at the impact of investment tax subsidies on the labor market for capital goods workers. Using data during a decade with considerable variation in the tax cost of capital (1979-1988), the results show that tax subsidies to investment drive up capital goods workers' wages. A 10 percent investment tax credit, for example, raises the relative wages of such workers, on average, by 2.5 percent - 3.0 percent relative to comparable manufacturing workers in other sectors and more for certain types of workers. Rising wages make up an important part of the rising supply curve for capital goods and reflects imperfect short-run mobility of production workers across sectors.

JEL Classification: J31

Accepted Paper Series





Not Available For Download

Date posted: August 15, 2003  

Suggested Citation

Goolsbee, Austan, Investment Subsidies and Wages in Capital Goods Industries: To the Workers Go the Spoils?. National Tax Journal, Vol. 56, No. 1, Part 2, p. 153-165, March 2003. Available at SSRN: http://ssrn.com/abstract=426320

Contact Information

Austan Goolsbee (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5869 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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