Re: uk-policy unemployment and inequality

geoff.beacon@virgin.net
Wed, 27 May 1998 07:35:08 +0100 (BST)

I am sure Gavin Cameron is right. If only we were all
economists and diligent enough to read the excellent
work of Steve Nickell we would understand the nature of
unemployment better. But just for the busy and less
gifted perhaps he could explain why David Chapman's
'work-spreading tax' falls foul of the 'lump of labour fallacy'.

I understood that the fallacy was to believe that the amount of
work was fixed. I don't see why a tax that has the
effect of restricting the supply of labour (as the WST does?)
sould be fallacious in this way. And surely if it is a wage
subsidy as David Chapman suggests, it is the other side of the
coin to Gavin Cameron's point that one of the explanations
for high unemployment is high labour taxes or high minimum wages.

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