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| Title: | | Underreporting of earnings and the minimum wage spike  |
| Authors: | | Tonin, Mirco |
| Issue Date: | | 2011 |
| Series/Report no.: | | Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5942 |
| Abstract: | | This paper documents a positive correlation within European labour markets between the proportion of full-time employees with earnings on the minimum wage and the extent of underreporting of earnings in the economy. Using a simple model of a competitive labour market, I show how this correlation can emerge as a result of the common dependence of both quantities on the strength of enforcement of fiscal regulation. This suggests that a high spike in the wage distribution at the minimum wage level is, in some contexts, an issue of fiscal enforcement, more than a labour market issue. |
| Subjects: | | minimum wage spike underreporting lighthouse effect |
| JEL: | | J38 H26 |
| Persistent Identifier of the first edition: | | urn:nbn:de:101:1-201109286350 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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