The Use of Tax Incentives for Employment of Underutilized Resources

This paper considers the use of subsidies or tax credits for the purpose of increasing the utilization of underemployed or underutilized resources. The particular formulation studied is the subsidy which is associated with changes in the level of usage of a particular input factor. The effects on both subsidized and unsubsidized factors are considered in terms of changed demand, the market effects, and economy-wide influences.