Consider an economy where firms' profit share of distributable output is 50%. After accounting for all taxes, the portion of total output per worker that is available for distribution between wages and profits is 60%. In this scenario, the worker's final real take-home wage is equivalent to 50% of their total productivity.
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Figure 2.19: The WS-PS Model with Taxation
Calculating Real Take-Home Wage
In an economy, firms retain 30% of distributable output as profit. After all taxes are accounted for, the portion of total output per worker available for distribution between wages and profits is 80%. Based on this information, what percentage of total productivity per worker constitutes the final real take-home wage?
Determining Post-Tax Distributable Output
Consider an economy where firms' profit share of distributable output is 50%. After accounting for all taxes, the portion of total output per worker that is available for distribution between wages and profits is 60%. In this scenario, the worker's final real take-home wage is equivalent to 50% of their total productivity.