Title

The labor income tax equivalent of price scissors in Prereform China

Document Type

Journal article

Source Publication

Journal of Comparative Economics

Publication Date

9-1-2000

Volume

28

Issue

3

First Page

524

Last Page

544

Keywords

Price scissors, terms of trade, price and wage controls, income tax, sources of investable resources

Abstract

In a centrally planned economy, the government can raise investable resources through price and wage manipulation. By treating price and wage controls as an implicit labor income taxation, we assess the scale of resource transfers from households to the government in prereform China. The implicit tax revenue during the 1964 to 1978 period is estimated at 10.4% of GDP. This implicit tax led to implied reductions of 31.1 and 37.8%, respectively, in the price of agricultural goods and in the nonagricultural-sector nominal wage during the 15 years. The equivalent average labor income tax rates were 16.7 and 24.1% for agricultural and nonagricultural workers.J. Comp. Econom., September 2000, 28(3), pp. 524-544. Lingnan University, Tuen Mun, Hong Kong.

DOI

10.1006/jcec.2000.1671

Print ISSN

01475967

Publisher Statement

Copyright © 2000 Academic Press. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

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