According to efficiency-wage theory
I: high income tax rates lead to high unemployment; and
II: this effect of high tax rates is not a proportional one-a doubling of the tax rate more than doubles the unemployment rate.

Question

According to efficiency-wage theory 
I: high income tax rates lead to high unemployment; and
II: this effect of high tax rates is not a proportional one-a doubling of the tax rate more than doubles the unemployment rate.

Quizplus · Accepted Answer

Efficiency-wage theory suggests that high income tax rates can lead to high unemployment because they reduce the incentive for workers to work. This effect is not proportional, meaning that a doubling of the tax rate will lead to more than a doubling of the unemployment rate.

According to Efficiency-Wage Theory