Chapter

Taxes and Subsidies on Different Goods in the Urban Sector

Raaj K. Sah and Joseph E. Stiglitz

in Peasants versus City-Dwellers

Published in print February 2002 | ISBN: 9780199253579
Published online January 2005 | e-ISBN: 9780191601682 | DOI: http://dx.doi.org/10.1093/0199253579.003.0012
Taxes and Subsidies on Different Goods in the Urban Sector

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An analysis of the effects of differential taxation or subsidization of different goods in the urban sector is presented. It is shown that the answer depends critically on two factors: how urban wages are set; and the nature of the effect of wages and prices on urban (un)employment and productivity. Reasons are developed and presented for the conclusion reached that, regardless of concern for inequality, there should be a presumption against differential taxation or subsidization of goods in the urban sector of less developed countries (LDCs).

Keywords: employment; less developed countries (LDCs); productivity; subsidization; taxation; taxes; unemployment; urban prices; urban sector; urban unemployment; urban wages

Chapter.  4345 words. 

Subjects: Economic Development and Growth

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