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The system-wide impact on the recipient region of a regional labour subsidy

Harrigan, F. and McGregor, P.G. and Swales, J.K. (1996) The system-wide impact on the recipient region of a regional labour subsidy. Oxford Economic Papers, 48 (1). pp. 105-133. ISSN 0030-7653

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This paper analyses the impact of the introduction of a general, automatic labour subsidy in a regional economy, concentrating on employment effects. We adopt a computable general equilibrium (CGE) approach, using a model parameterised on data from a UK region, Scotland. Two particular issues are identified which have usually been neglected in previous work in this area: the impact of the fiscal injection associated with the subsidy and the qualitative and quantitative consequences of allowing the nature of the regional labour market to vary.