Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Should the marginal tax rate be negative? Ragnar Frisch on the socially optimal amount of work.
Abstract: In the late 1940s, Ragnar Frisch published two articles in
Norwegian that constitute a pioneering attempt to apply welfare economics
to a problem of economic policy. The main contention of the articles is
that there exists a fundamental externality in the labour market because
the marginal productivity of labour depends both on input in the individual
unit and on total labour use in the economy. While inspired by the problems
of postwar reconstruction, Frisch came to regard it as a general problem in
a decentralized economy, and he explores its consequences for wage and tax
policy. While Frisch attached great importance to the analysis, it has
received little attention in the subsequent literature.
Keywords: Economic policy; wage; tax policy; (follow links to similar papers)
JEL-Codes: E20; (follow links to similar papers)
35 pages, January 23, 2017
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