Question
Suppose the Irish government wants to fund a universal health care programme through a payroll tax of 2 per hour. Consider a sector that relies
Suppose the Irish government wants to fund a universal health care programme through a payroll tax of 2 per hour. Consider a sector that relies heavily on workers with specialised skills that cannot be easily hired from other sectors or countries, although workers with these skills can easily move to other sectors.
i) Explain what the information about workers and firms implies for labour supply and demand in this sector.
ii) Explain how the introduction of the payroll tax will likely affect wages and the number of workers employed in this sector.
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