Abstract

VARGAS SANCHEZ, Juan Roberto; VELAZQUEZ ORIHUELA, Daniel  and  HERNANDEZ VELEROS, Zeus Salvador. A General Equilibrium Model with Redistributive Policy. Econ: teor. práct [online]. 2022, n.56, pp.19-39.  Epub Apr 25, 2022. ISSN 2448-7481.  https://doi.org/10.24275/etypuam/ne/562022/vargas.

A general equilibrium model is developed with specialized workers and the public sector as a distributive resource. This sector collects a tax on corporate profits and grants unconditional transfers to workers. Mathematical simulation exercises show that when redistributive tax policy targets transfers to workers with the lowest wages, the representative company reports a higher net profit rate and total net earnings. Furthermore, the production level reached is higher than had transfers been granted to workers earning the highest wages.

Keywords : Transfers; taxes on profits; redistribution; wage differential.