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Title:Minimum wage or negative income tax: why skilled workers may favor wage rigidities PDF Logo
Authors:Bacache-Beauvallet, Maya
Lehmann, Etienne
Issue Date:2005
Series/Report no.:IZA Discussion Papers 1570
Abstract:This article studies the political choice over the extent and the means of income redistribution between high and low skilled workers. Redistributive tools encompass fiscal transfers with negative income tax and minimum wage. Using fiscal instruments only is assumed optimal. We show that high skilled workers may favor a second-best minimum wage requirement. This is because minimum wage increases unemployment, hence the marginal cost of redistribution is higher which gives a pretext for high skilled workers to moderate low skilled workers claim for income redistribution.
Subjects:unemployment
political economics
income redistribution
minimum wage
JEL:D78
E24
H23
J38
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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