Effect of the Tax System ON R&D Intensity, Growth, Wages and Consumption Share

• Type: Article in International Scientific Journal
• Date: 2017

Authors

Óscar Afonso (Author) FEP; Bandeira, AM (Author) Other; Magalhaes, M (Author) Other

Journal

Title: Australian Economic Papers

Vol. 56

Pages: 271-291

ISSN: 0004-900X

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 2 Citations

Other information

Authenticus ID: P-00N-BC3

DOI: 10.1111/1467-8454.12102

Abstract (EN): We propose a general equilibrium knowledge-driven (semi-)endogenous-growth model with horizontal R&D, which is extended to consider two types of labour, skilled and unskilled, and exogenous government expenditure, financed through taxes on financial assets and on labour income, to analyse the implications of the tax system on R&D intensity, economic growth, wage inequality and consumption share in the output. In particular, we show that: (i) taxes have negative influence in the consumption share, being higher the marginal effect of the labour-income tax; (ii) for any given government expenditure share, an increase (a decrease) in financial-assets tax decreases (increases) the labour-income tax; (iii) only the financial-assets tax affects negatively the R&D intensity and the skill-premium; thus, to reduce the skill-premium the financial-assets tax must increase; (iv) ignoring the effect on wage inequality and on R&D intensity, taxes are substitutes.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 21