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Eurasian Economic Review

, Volume 3, Issue 2, pp 98–113 | Cite as

Technological Choices and Labor Market Participation: Negative Income Tax

  • Samir Amine
  • Pedro Lages Dos Santos
Article

Abstract

In this article, we study the effect of the Negative Income Tax (NIT) on reducing inequalities. Using a matching model with a continuous distribution of worker skills, we show that a NIT reduces inequalities in favor of less qualified workers by making firms less selective and jobs less complex. However, this technological choice decreases the workers’ average productivity and therefore increases the unemployment rate.

Keywords

Matching Technological Choice Negative Income Tax 

JEL Classification

D63 H21 J41 J64 

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Copyright information

© Eurasia Business and Economics Society 2013

Authors and Affiliations

  1. 1.Université du Québec en Outaouais and CIRANOQuébecCanada
  2. 2.EDEHNUniversité du HavreLe HavreFrance

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