who should pay the tax Market for Research Assistants Wage D

who should pay the tax

Market for Research Assistants Wage (Dollars per hour) 4 Labor Demanded (Number of workers) 248 Labor Supplied (Number of workers) 152 Demand Shifter Supply Shifter Tax Levied on Employers (Dollars per hour) 0 Tax Levied on Workers (Dollars per hour) 0

Solution

When the tax will will be levied on employers the immediate impact on labour will be on labour demand and labour demand will shift leftward. The employer will demand that same amount labour if gross wage is lowered. Here the tax icidence will be shared by employer and employee. Because the employer will shift certain amount of tax to employee. The wages received by the employee will be less and propotionately the employer will pay more.