Taxes, transfers and employment in an incomplete markets model

Jorge Alonso-Ortiz, Richard Rogerson

Research output: Contribution to journalArticlepeer-review

24 Scopus citations


The consequences of increases in the scale of tax and transfer programs are assessed in the context of a model with idiosyncratic productivity shocks and incomplete markets. The effects are contrasted with those obtained in a stand-in household model featuring no idiosyncratic shocks and complete markets. The main finding is that the impact on hours remains very large, but the welfare consequences are very different. The analysis also suggests that tax and transfer policies have large effects on average labor productivity via selection effects on employment.

Original languageEnglish (US)
Pages (from-to)949-958
Number of pages10
JournalJournal of Monetary Economics
Issue number8
StatePublished - Nov 2010
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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