Hi, I'm finishing up a large analysis of a production function shift in the construction industry and have one outstanding/hanging issue...tax payments by workers and employers. First the setup...I am modeling a change in worker wage incomes resulting from a hypothetical productions function shift that redistributes spending on major inputs based on the characteristics of two different groups of states depending on whether they have prevailing wage regulations at the state state level. Rather than changing overall spending within the industry, I am modeling a net-zero change in the spending pattern My problem is that because the shift happens both between categories (i.e. spending on wages decreases while spending on materials increases) and within categories (the overall wage distribution shifts to the left) I am unable to simply use an employment compensation impact to model the income change solely within the industry in a way that accounts for worker paid taxes and FICA. I've managed to use the Employee Compensation breakdown in the IxI Social Accounting Matrix to calculate the employer paid taxes, however I can't quite figure out how to get to the employee side. Help would be appreciated!
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