Factor subsidies, employment generation and cost per job : a partial equilibrium approach

Holden, D and Swales, J K (1993) Factor subsidies, employment generation and cost per job : a partial equilibrium approach. Environment and Planning A, 25 (3). pp. 317-338. ISSN 0308-518X

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Abstract

Factor subsidies in a perfectly competitive setting are analysed. A very general model is used to derive expressions for the effect of a factor subsidy on the price and quantity of output and the two factor inputs. These expressions are differentiated to generate qualitative results for the impact of changes in the product-demand, production-function, and factor-supply parameters on the subsidy effects. A similar procedure is used to investigate the exchequer cost per job of general labour and capital subsidies in an industry with Cobb — Douglas technology. The analysis is relieved with illustrative simulations in which ‘representative’ parameter values are used.