Comment on the 'Five Economists' Plan: the original idea and further developments

Abstract

Two-part paper commenting on Peter Dawkins argument for the “wage-tax trade-off” proposed by the “Five Economists” as part of their policy package for reducing unemployment. As he explains, the trade-off involves using an earned income tax credit (EITC) scheme “as a way of increasing the incomes of low-wage earners in low-income families, rather than increases in the award wages safety net”. <P> The first paper will focus on the EITC component of the package, taking as an example the Lambert (2000) scheme reported in the paper. I will also concentrate on the effects of the scheme for two-parent families. <P> The second paper focuses on the question of whether the safety net wage freeze proposed in the ‘Five Economists’ Plan’ would significantly reduce unemployment, and whether it seems like a good way to try and achieve that objective.