Please use this identifier to cite or link to this item:
Title: Wage policies, employment, and redistributive efficiency
Author: Ooghe, Erwin
Keywords: Política salarial
Política d'ocupació
Wage policy
Manpower policy
Issue Date: 2015
Publisher: Institut d’Economia de Barcelona
Series/Report no: [WP E-IEB15/42]
Abstract: I analyze whether wage policies -like minimum wages and wage subsidies- can add value to an optimal non-linear earnings tax scheme in a perfectly competitive labour market. Jobs in the labour market differ along two margins: intensity (labour effort) and duration (labour hours). Three key results follow. First, even though minimum wages destroy low performance jobs, they increase employment if the minimum wage is binding, but not too high. Second, minimum wages -and wage and labour controls more generally- can enhance redistributive efficiency. The underlying mechanism is their potential to deter mimicking and thus to relax the self-selection constraints in the optimal income tax problem. Third, wage and labour controls become superfluous if a wage-contingent earnings tax scheme –a tax scheme that depends nonlinearly on earnings and wages- can be optimally set. Instead, wage and labour subsidies can be optimal in a wage-contingent tax scheme.
Note: Reproducció del document publicat a:
It is part of: IEB Working Paper 2015/42
Appears in Collections:IEB (Institut d’Economia de Barcelona) – Working Papers

Files in This Item:
File Description SizeFormat 
IEB15-42_Ooghe.pdf825.97 kBAdobe PDFView/Open

This item is licensed under a Creative Commons License Creative Commons