After the government starts taxing the cost of labor by t per hour in a covered sector

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After the government starts taxing the cost of labor by t per hour in a covered sector only, the wage that workers in both sectors receive is w, but the wage paid by firms in the covered sector is w + t. What effect does the subsidy have on the wages, total employment, and employment in the covered and uncovered sectors of the economy?

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Microeconomics

ISBN: 9780133456912

7th Edition

Authors: Jeffrey M. Perloff

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