Authors: Chiaying Liu Juinjen Chang
Publish Date: 2010/09/17
Volume: 102, Issue: 1, Pages: 57-75
Abstract
This paper develops an endogenous growth model that sheds light on the roles of the revenuesharing scheme in a macroeconomy We show that a higher sharing ratio attributable to labor unambiguously promotes the equilibrium working time but has an ambiguous effect on the balancedgrowth rate Of interest if the economy is characterized by a higher degree of monopoly a sharing compensation system is more likely to boost the balanced growth rate In a normative analysis we show that to remedy the distortions caused by the sharing scheme and market imperfections the government should provide a subsidy to capital incomes while it may either tax or subsidize labor incomes
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