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This paper applies queueing theory to derive the equilibrium of a labor market with frictions. Queueing arises when workers can get jobs by waiting at a firm for a position to open. Queueing theory provides expressions for the expected numbers of vacancies, searching workers and queueing workers. As the ratio of workers to firms increases, the ratio of queueing to searching workers increases. At high ratios of workers to firms, dual wage equilibria arise.
This paper derives the incidence of linear taxes on capital and labor in a competitive equilibrium in balanced growth. The paper further considers a tax on consumption and a tax credit. Tax incidence is determined using an analytic expression for the saving rate out of income net of all taxes and credits. Results for zero population growth do not extend to positive population growth, where the incidence of a tax on interest income is positive and a tax on consumption reduces the interest rate.
Mathematica Notebooks in PDF for Markov Consumption Problem: