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The Labor Income Tax Equivalent Of Price Scissors In Pre-Reform China, Hiroyuki Imai
The Labor Income Tax Equivalent Of Price Scissors In Pre-Reform China, Hiroyuki Imai
CAPS Working Paper Series
The government in a centrally planned economy can raise investable resources through price and wage manipulation. By treating price and wage controls as an implicit form of labor income taxation. I have assessed the scale of resource transfers from households to the government in pre-reform China. From the observed rise of the labor income share in the non-agricultural sector output resulting from price and wage liberalization since 1979, the implicit tax revenue during the 1964-78 period is assessed as 10.1 % of GDP. According to estimates based on a two-sector model, this implicit labor income tax led to implied reduction …