abstract: 'In an endogenous growth model with two engines of R\&D and capital, we

  investigate the environment of ``inclusive growth{''''} for tax

  reallocations (tax increases or tax credits) to gain broader benefits in

  terms of promoting the overall GDP growth without an increase in income

  inequality. Our results show that a tax increase in the capital-good

  sector can result in inclusive growth, boosting overall growth and

  reducing income inequality, provided that the status quo tax rate is not

  too high. Surprisingly, tax credits are not able to achieve such

  inclusive growth. While the GDP growth rises, a tax credit in the R\&D

  sector not only increases income inequality but also decreases the

  aggregate employment, if the labor mobility cost between the final-good

  and R\&D/capital-good sectors is relatively low. This provides a caution

  to policymakers given the fact that research tax credits have served as

  a common incentive to strengthen the R\&D environment.'
affiliation: 'Wang, WN (Corresponding Author), Natl Taichung Univ Sci \& Technol,
  Dept Int Business, Taichung, Taiwan.

  Wang, Wei-Neng, Natl Taichung Univ Sci \& Technol, Dept Int Business, Taichung,
  Taiwan.

  Liu, Chia-Ying, Aletheia Univ, Dept Econ, Taipei, Taiwan.

  Chang, Juin-Jen, Acad Sinica, Inst Econ, Taipei, Taiwan.'
author: Wang, Wei-Neng and Liu, Chia-Ying and Chang, Juin-Jen
author-email: wei7656@gmail.com
author_list:
- family: Wang
  given: Wei-Neng
- family: Liu
  given: Chia-Ying
- family: Chang
  given: Juin-Jen
da: '2023-09-28'
doi: 10.1002/soej.12473
earlyaccessdate: NOV 2020
eissn: 2325-8012
files: []
issn: 0038-4038
journal: SOUTHERN ECONOMIC JOURNAL
keywords: inclusive growth; tax policy; two engines of growth; wage differential
keywords-plus: 'MONETARY-POLICY; ENDOGENOUS GROWTH; TECHNOLOGY; TAXATION; MODEL;

  INNOVATION; SUBSIDIES; ENGINES; RUN'
language: English
month: JAN
number: '3'
number-of-cited-references: '44'
pages: 979-1009
papis_id: b4f246403575614be1d00afbb4cf4f56
ref: Wang2021taxpolicy
researcherid-numbers: Chang, Juin-Jen/ABD-9235-2022
times-cited: '1'
title: Tax policy implications for a two-engine growing economy
type: Article
unique-id: WOS:000590155100001
usage-count-last-180-days: '0'
usage-count-since-2013: '5'
volume: '87'
web-of-science-categories: Economics
year: '2021'