Regardless of how price elastic labor demand curves are, employers are unaffected by wage taxes if labor supply is perfectly inelastic.

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Quizplus · Accepted Answer

Wage taxes generally shift the labor demand curve downward, resulting in a lower equilibrium wage and a lower quantity of labor. However, if labor supply is perfectly inelastic, the quantity of labor supplied remains the same regardless of the wage rate. In this case, employers are able to fully pass on the cost of wage taxes to their workers in the form of lower wages without experiencing a decrease in the quantity of labor demanded. Therefore, regardless of how price elastic labor demand curves are, employers are unaffected by wage taxes if labor supply is perfectly inelastic.

Regardless of How Price Elastic Labor Demand Curves Are, Employers