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by barry-cotter
2344 days ago
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Because a negative income tax increases labor market attachment, giving workers more skills, work experience and pride and increases the number of people working. A higher minimum wage on the other hand reduces the number of people working and has no positive effects on employment or skills. From a politician’s perspective a minimum wage is superior because the link between a higher minimum wage and greater unemployment is opaque but that from subsidizing employment is quite direct. Also all of the social cost of subsidizing employment is borne by the government while that of the reduction in labor supply and employment is borne by employers who can’t find workers and potential employees. You’re right that annualized refunds are far from ideal. Monthly would be better. Argument in video form, with diagram below. https://mru.org/courses/principles-economics-microeconomics/... |
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