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Should the marginal tax rate be negative? Ragnar Frisch on the socially optimal amount of work.

Sandmo, Agnar
Working paper
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URI
http://hdl.handle.net/11250/2428767
Date
2017-01-26
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  • Discussion papers (SAM) [578]
Abstract
In the late 1940s, Ragnar Frisch published two articles in Norwegian that constitute a pioneering attempt to apply welfare economics to a problem of economic policy. The main contention of the articles is that there exists a fundamental externality in the labour market because the marginal productivity of labour depends both on input in the individual unit and on total labour use in the economy. While inspired by the problems of post‐war

reconstruction, Frisch came to regard it as a general problem in a decentralized economy, and he explores its consequences for wage and tax policy. While Frisch attached great importance to the analysis, it has received little attention in the subsequent literature.
Publisher
Institutt for samfunnsøkonomi, NHH
Series
DP SAM;1/2017

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