In 2003, Ireland reduced its corporate tax rate from 16 percent to 12.5 percent. In labor markets this would cause an increase in labor demand, which would push real wages up.

Question

Quizplus · Accepted Answer

Reducing the corporate tax rate can make a country more attractive for investment. This can lead to an increase in capital investment in the economy, which in turn can increase the demand for labor as businesses expand. When the demand for labor increases, it tends to push real wages up, assuming the supply of labor does not increase at the same rate.

In 2003, Ireland Reduced Its Corporate Tax Rate from 16