Abstract

BOTERO GARCIA, Jesús. Effect of Taxes on Capital and Labor in Colombia: A Computable General Equilibrium Analysis. ecos.econ. [online]. 2011, vol.15, n.33, pp.49-69. ISSN 1657-4206.

Using a computable general equilibrium model, calibrated for Colombia, it is analyze the impact of various economic policies, which affect the relative price of production factors. The results concluded that the incentives for investment, which can be interpreted as actions that decrease the cost of capital, however lead to the accumulation of capital, and thereby increase the productivity of labour, generating net positive effects on employment. The Elimination of the payrol taxes, for its part, generates a reduction in the cost of labour, but their overal effect on employment is partial y offset by the tax measures designed to generate alternative income to keep the benefits associated with these contributions. Final y the suggestion is that the ideal scheme would be one that provides incentives for investment, focused towards employment-intensive sectors, at the time that creates networks of social protection appropriate to deal with the problems associated with poverty.

Keywords : Computable General Equilibrium models; investment incentives; payrol taxes.

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